Fraud in Online Event Tickets

CNP Fraud in Event

Ticket Sales
A Report

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Fraud in Online Event Tickets

Introduction
The effects of technology on commerce can be totally transformative, and the
market for event tickets is a prime example. Today’s event goers are no longer
forced to queue outside a window for paper tickets; they can simply purchase them
digitally from anywhere in the world. The global online event ticket market is strong
and growing, valued at $30 billion annually, and exhibiting an impressive 19%
compound annual growth rate. In the US alone, revenue is expected to exceed
$10 billion in 2017.

The move online has clearly benefited consumers - who can score front row seats
with the click of a button. But the changing business landscape creates issues
for ticket sellers. One such challenge stems from the high resale value of tickets,
combined with an increase in the liquidity of secondary markets. This combination
attracts fraudsters who are looking for a quick score. They can buy expensive
tickets with stolen credit card information and then easily sell them secondhand.

The increasing abundance of vendors selling tickets for any given event - including
the aforementioned peer-to-peer ticketing marketplaces - also poses difficulties
for merchants. The commoditization of their tickets makes fostering a sense of
customer loyalty extremely tough, and also means that merchants face a very high
proportion of orders from first-time customers, which are most difficult to review.

The growing use of mobile devices also presents challenges for merchants. Legacy
fraud tools used to assess desktop fraud aren’t always accurate when reviewing
mobile orders. Furthermore, mobile phones are often used to purchase tickets
outside venues, sometimes minutes before an event. These cases are particularly
difficult for fraud teams who are caught off guard late at night and/or on weekends.

Many ticket sellers try to prevent these fraud attacks by adding stringent fraud filters
to the review process. While these systems may identify some fraud attacks they
also end up falsely declining many orders from good customers. All of the above
necessitate an efficient and scalable fraud management solution that won’t impede
the revenue stream or hurt the shopping experience.

Brands like SeatSmart, Rukkus, RazorGator and FanXchange trust Riskified to

manage their CNP fraud. We compiled this comprehensive report to share our
findings from reviewing hundreds of thousands of online event ticket orders. Inside,
we share insights into false declines, a largely invisible issue that severely impacts
most merchants’ ability to grow. Merchants will also find actionable tips, best
practices, plus tools to better grasp fraud trends in the industry.

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Fraud in Online Event Tickets

Online Event Tickets: An Overview

Selling tickets online is a lucrative business. Be it popular concerts, major sporting
events, or expensive broadway shows, it’s an exciting and vibrant marketplace.
But the wide appeal and high prices of online tickets also make them appealing to
fraudsters.

Selling event tickets online is [relatively] safe

Based on Riskified’s data, the average approval rate for online event tickets is 92%.
Merchants approving less are most likely turning away good customers.
For context, the approval rate of online orders for watches and jewelry is about
96%, while online sneaker merchants can only safely approve about 80% of their
orders. The bottom line is that selling event tickets online carries some risk, but this
report should help merchants concentrate their fraud prevention efforts on the most
dangerous segments.

92%
Overall
approval rate

The mobile arena

Only 32% of orders we reviewed were made via mobile, with no significant
variation in approval rates compared to desktop. There are two main reasons for
the low penetration rate. First, trying to select a seat using a mobile site or app is
significantly easier on a desktop’s large screen. Second, consumers still feel safer
placing a high value order via desktop - which is the case across all industries.
Indeed, orders made via mobile devices are 15% lower in value than desktop
orders.

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Fraud in Online Event Tickets

The exception to the rule is %

32
event day, when the number
of ticket purchases made ord
ers
bile
mo
via mobile rises by 25%. For 68
%

merchants, understanding
ers
these trends is important, as skt
op
ord
de
it helps prepare fraud review
teams in a manner that
best suits the nature of the
incoming orders.

G E
STA

Digital tickets take center stage

A characteristic unique to online event ticketing is the high rate of digital goods.
Two thirds of tickets sold online are digital, an impressive figure that attests to
the market’s maturity. To compare, in the online gift card market (where digital
goods sales are also growing fast) digital cards made up about 34% of orders in

Paper
order avg.

$507

Digital
67%
order avg.

$304
33%

2016. Physical and digital online event tickets have similar approval rates (around
92%). Still, fraud management tools need to address the dominance of digital
orders. Specifically, during review the digital presence (email, device, IP) should
carry significantly more weight than any associated geographical data points (mail
address, phone number). Traditional tools often fail to distinguish between the two
categories of data or simply lack the technological capability to do so.

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Fraud in Online Event Tickets

Isolating The Risk

Segmenting risk goes beyond accounting for digital vs. physical order attributes.
Combing the entire order population to establish shopping trends makes it easier
to discern between safe and risky behaviors. In this section we share some order
components that can help fraud teams decide uncertain transactions.

One is the riskiest number

Riskified’s data shows a strong correlation between approval rates and the
number of tickets in a basket. One might assume that multiple-ticket carts are more
dangerous, because fraudsters with stolen credit cards buy as many tickets as
possible to resell. But our data actually indicates otherwise. Single-ticket baskets
are 70% more likely to turn out to be fraud compared to multiple-ticket baskets. This
is in contrast to most other industries, where single-item carts are safer. Luckily, this
relatively risky segment makes up only 27% of online event ticket orders. And even
for single-ticket carts, merchants should still be approving 9 out of 10 orders. For
the 73% of carts that contain multiple-tickets, merchants should see approval rates
close to 93%.

The reason fraudsters sometimes opt for single tickets relates to their work method.
They often troll ticket boards searching for fans who are seeking tickets to a specific
event. They buy the expensive ticket with stolen credit card details, just to turn
around and sell it for a “bargain” price to the unsuspecting fan. Another reason why
fraudsters sometimes opt for a single ticket is to stay under the radar of fraud teams
who usually turn their attention to big orders.

%- Approval rate

90% 92.5% 92.5% 93%

1 ticket 2-3 tickets 4-5 tickets 5+ tickets

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Fraud in Online Event Tickets

Fraudsters are big spenders

It’s the rule of thumb across industries - the more expensive an item, the more appeal
it has to fraudsters. Online event tickets are no exception. According to Riskified’s
data, online orders worth over $1000 are four times more likely to end up as fraud
compared to orders valued at $200 or less. Similarly, as order value rises, the
approval rate decreases. While merchants can approve 96% of online event ticket
orders worth $200 or less, they can only approve 81% within the most expensive
order bracket.

When considering the number of items in the cart, an expensive order containing
multiple tickets is less likely to be fraudulent compared to an expensive order for a
single ticket. Online orders for a single ticket valued under $200 enjoy an approval
rate of 93%. When worth $500 or more, the approval rate for a single-ticket basket
falls to 82%.

96%
92% 87%
81%

Approval Rate

< $200 $200 < $500 $500 < $1000 $1000 <

Early birds are lucrative and safe

Diehard fans tend to buy expensive seats long before an event, and this is clearly
reflected in our data. We analyzed the timeframe between the purchase date
and event day to see if we could glean a meaningful pattern for fraud prevention
purposes.

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Fraud in Online Event Tickets

Orders made 60 days prior to an event are - on average - worth over twice as much
as orders placed day of. And approval rates for these orders placed well in advance
are 4% higher. As the day of the event nears, approval rates and order values steadily
decrease, and the rate of fraud attacks leaps. A fraudster is five times more likely
to be behind an order made on the day of an event than an order made 60 days
before.

Order
Value

$436
96.2%
$378
95.4%
$341
95.2%
$301 93.7%

$255 93.1%
Rate
oval
Appr

$196 93%

Days before 0-1 1-2 2-3 3-7 7-30 30-60

We also took a closer look at the 24 hours leading up to an event. We expected the
level of risk to peak in the final hours before the event, but found that approval rates
actually remain quite steady, hovering between 91% and 93%. The reason behind this
is likely that fraudsters are very calculating: when they buy tickets online they need to
leave themselves enough time to turn them for a profit.

Promo codes are a positive indicator

With stolen credit card details in hand, few fraudsters will bother to search for and use
a promo code. Legitimate shoppers, on the contrary, will often use a code, or search
for one prior to checkout.

We looked into the impact promo code use has on risk, and found a clear correlation.
Orders made using promo codes are more than 5% safer than orders made without
codes. In fact, merchants should be approving nearly 97% of these orders. The
discount also impacts the value of a purchase. Orders placed with promo codes were
worth nearly 20% more than orders placed without.

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Fraud in Online Event Tickets

Which Events Do Fraudsters Prefer?

With online tickets covering such a wide range of entertainment options, fraud teams
need to look at risk as it manifests across various events. In the following section we
show which sales are safest and where attacks are more prevalent.

Safe and risky trends by category

We broke down online event ticket sales into categories and analyzed the associated
risk. Sporting events is the safest category, where merchants can approve at least
95% of orders. Theater tickets came in second (with safe approval rates near 92%),
followed by concert tickets (88%) and festival tickets (near 80%).

The differences between the categories are quite significant, with an 18% gap in
approval rates between the safest and riskiest. In fact, orders for festival tickets are
four times more likely to be targeted by fraudsters when compared to orders for
sporting event tickets, perhaps due to these mass events’ appeal to younger crowds.
Nevertheless, merchants can and should approve 4 of 5 festival ticket orders.

95%
Sports #
92%
Theater

88%
Concert
13
$3

78%
84

Music
$6

Festival
13
$7

57
$4

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Fraud in Online Event Tickets

Which acts do fraudsters like best?

A deeper look into each category can help further identify trends to help isolate fraud.
Within the sporting tickets category, we can establish clear differences between the
various events. The overall approval rates for online sports tickets is 95%. Baseball,
college sports, hockey and American football tickets all have average approval rates
(or above). But US Soccer, NBA and European football tickets all exhibit approval
rates lower than average.

When it comes to concert tickets, we also found some interesting trends. The Aging
Rockers category (Guns N’ Roses, Aerosmith and the Rolling Stones) shows good
approval rates, while acts that appeal to a younger crowd - for example, Justin
Bieber, Drake, Coldplay or Beyonce - carry more risk of fraud.

Based on fraud rates, Justin Bieber tickets are four times more appealing to
fraudsters than Guns N' Roses tickets. It’s likely that fraudsters are young and tech
savvy, and more confident they can sell tickets for acts they are familiar with. For this
reason, concerts by bands that they are less familiar with are not targeted as often.

92%
Guns n Roses
89.3%
Aerosmith 87.4%
87.1% Rolling Stones
86.5% Adele
86%
Black Sabbath
84.2% Beyonce

Maroon 5
83.2%
81.5% Coldplay
74.5% Drake and Future

Justin Bieber

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Fraud in Online Event Tickets

Technology To Rule Out Fraud

Just like fraudsters have a tendency to target certain events and categories, they
also have preferences in terms of the technology they use. The more details you
aggregate about each order, the more likely you are to detect peculiarities when they
arise. For this reason, merchants need to make sure they have access to the most
advanced technological fraud detection tools.

To proxy or not to proxy?

One of the most common tools fraud review teams harness is one that can identify
proxy servers. IPs with a proxy indication tend to be cause for alarm, as they imply
that the shopper is trying to hide their true location. But while orders using proxy
servers are riskier, they should never be auto-declined. Riskified uses precise proxy
detection tools to penetrate the most sophisticated proxy servers. And even when
we identify proxy usage in orders for event tickets, we still approve 43% of them.

Proxy connections must be reviewed in context, as there are legitimate (even

common) use cases. For instance, Chinese shoppers use them to bypass
government restrictions. International consumers also use proxy connections to
access geographically restricted content. For example, Hulu is currently available
only in the US and Japan, so someone from the UK may use a proxy to watch The
Handmaid’s Tale, and then shop online under the same connection. Sometimes
even local shoppers use proxy to enhance their sense of security or to protect their
identity.

You can learn a lot from a browser

Unlike proxy, which internet browser a shopper is using may seem like a trivial data
point. But we’ve actually uncovered a relationship between fraud and browser type.
Orders made via Internet Explorer (IE) have the highest approval rates, in excess
of 95%. Safari and Chrome follow, with approval rates of 93% and 91% respectively.
Finally, Firefox is slightly more risky, yet Riskified still approves 90% of orders made
from Firefox browsers.

The reason may lie in the fact that Firefox is an open source browser. This means
users can make their own modifications to functionality, which carries appeal to tech
savvy users, especially those wanting to outsmart detection tools.

Although decisions should not be based on these numbers alone, they should
certainly be considered when reviewing order data holistically. By combining browser

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Fraud in Online Event Tickets

and proxy connection, for example, we can zoom in on fraud. Riskified is able to safely
approve 95.4% of orders made via IE and a non-proxy connection. On the opposite
end, the approval rate for orders made via FireFox with a proxy server is 22.4%!

Mapping out the risk

Driving accuracy in decisions involves corroborating the story behind an order. With
physical goods, the shipping and billing address - along with the credit card BIN -
can be revealing. But when selling digital tickets, the IP address takes center stage.
Many-a-fraudster try to reroute their IP address to appear as though it’s coming from
somewhere else - preferably from the BIN country. But with reliable IP detection in
place, understanding geographic trends can help drive accuracy.

Average
Approval Rate
Order Value

Israel $592 95.1

US $333 95.1
Italy $510 89.2
Germany $362 88.6
Great Britain $455 86.7
Brazil $511 85.9
Canada $365 85.4
France $441 84.3
Mexico $813 83.8
Spain $384 83.5
Portugal $357 81.8

We looked at approval rates by IP country, and how they diverged from the 92%
average industry-wide. Online ticket orders from the US and Israel were extremely
safe, with approval rates in excess of 95%. And with an average order value of nearly
$600, ticket orders from Israeli IPs are also quite lucrative.

Orders made via French, Mexican and Spanish IPs were riskier, with approval rates
around 84%. Orders from Portuguese IPs rounded off the list, with an 82% approval
rate, which still offers plenty of opportunity to merchants who can evade the fraud and
find the good story behind the purchase.

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Fraud in Online Event Tickets

You’ve got mail!

In the absence of a shipping address, email assessment is your MVP. Apart from
linking the email address digitally to the shopper, merchants need to establish its
overall legitimacy with tools that can obtain the account holder’s name, age and
address. Fraudsters often create makeshift emails to support their shopping sprees.
So it comes as no surprise that an email’s age can be quite telling. The safe approval
rate for emails that are at least two years old exceeds 96%, whereas orders made
with emails created less than 3 months prior to purchase have an approval rate of
61%.

Another notable attribute is the email

name. Most people make personal
email addresses that bear some 61.2%
connection to their name. When the < 90
first, or last name of the cardholder
is present in the email address, the 84.3%
chances of fraud are reduced. 90 < 365

Almost 90% of email addresses 90.7%

used to order online tickets contain 365 < 730
a variation of either the cardholder’s
(or recipient’s) first name, last name 96.5%
or both. Of these, Riskified approves Email age
more than 93%. Orders where the > 730
email does not match the name have
an approval rate of 81%.
%- Approval rate
<> - Email age in days

Recognize and Nurture Safe Segments

With many different outlets offering tickets to the same events, the online ticketing
market is extremely competitive. Customer loyalty is fluid, and identifying and
nurturing shoppers is no easy task. But recognizing key customer segments and
making sure they’re receiving fast and pleasant service is important. In the section
below we mapped out some parameters to help drive approval rates.

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Fraud in Online Event Tickets

Got Link?
According to Riskified’s data, roughly 80% of online ticket orders are made by first-
time customers. Ticketing is a commodity market: consumers are often after the
lowest price, or a specific seat, and not a specific merchant. This complicates matters
for merchants, who are more trusting of returning customers, while treating first-time
visitors with caution. The value of returning customers cannot be overstated: they are
30% less likely to commit fraud, and if they’re happy, they’re likely to keep coming
back. So identifying them is highly beneficial.

It comes as no surprise that at 94%, approval rates for returning customers are above
the industry average. But Riskified also approves 91% of orders placed by first-time
shoppers. Even without dramatic differences in approval rates, merchants need to
be able to recognize and nurture returning customers - by name, address, telephone
number, email, IP, payment details or channel. If one of the parameters changes
(name due to marriage, address due to a move, channel due to a new device, etc.)
merchants can understand whether they are dealing with a returning customer, a new
customer, or whether it could be a case of account takeover.

Don’t grade good orders poorly

Though college students usually have their heads buried in books, they still seem
to find plenty of time to shop. Unfortunately, in terms of online fraud, their orders will
often receive a failing grade.

One fraudulent order from a college dorm might tarnish the entire building address
or IP and land it on a blacklist. But actually, college students and staff are great
customers to nurture. We looked at orders with a link to a college or a university (by
email domain, IP, billing or shipping address), and noted that approval rates for these
orders neared 97%. A fraudster is hard pressed to obtain a makeshift “edu” email
address, or browse from a college-associated IP.

Who Are You Turning Away?

One of the biggest problems encountered by online event ticket merchants is one
they are not always aware of. Because some of our merchant partners start off by
sending us only orders they intend on declining, we have a unique perspective
on the parameters that lead merchants to decline good orders. Riskified is able to
approve over half of all online event ticket orders that were slated for decline. The
reasons vary, but below are the main factors contributing to this loss of revenue for
many merchants.

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Fraud in Online Event Tickets

Fear Factor 1: high order value

The average value of orders that online ticketing merchants planned to decline
was $513.00, roughly 32% higher than the average order value we encounter from
merchants who send us their entire volume The trend is clear: as the stakes get
higher, approving orders becomes more challenging for merchants.

First time custumer 80%

Returning custumer 20%

Fear Factor 2: digital tickets

More than 85% of orders slated for decline were for digital tickets. Compare that to
the 66% ratio of digital orders across the board, and it is obvious fraud teams are
more on edge when dealing with non-paper tickets. This is to be expected - with no
physical address and only an email to work with, it’s a lot more difficult to verify an
identity. Nevertheless, Riskified was able to approve 52% of these orders, which had
an average value of $400.

The key to managing fraud in digital goods is having access to precision tools to help
establish an accurate digital footprint of the device used, and data enrichment tools to
identify and locate a presence across the web - mainly social networks.

Fear Factor 3: first-time customers

Some 85% of orders slated for decline by online ticketing merchants were placed by
first-time visitors to the store. Merchants always feel more comfortable with returning
customers who have a track record - and are more likely to decline new customers,
sometimes without a good reason. Riskified approved 53% of orders made by first-
time customers, which merchants planned to decline. To compare, we approve 46%
of declined orders made by returning customers.

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Fraud in Online Event Tickets

If a merchant plans to decline a returning customer, it’s likely due to a negative

track record, or because something in the order details changed from the previous
encounter. Maintaining a database to help link orders to customers is a fundamental
part of fraud management. Riskified leverages an extensive network to help link
customers and online transactions across shops, geographies and verticals.

Conclusion
The eCommerce revolution presents huge opportunities for online event ticket
merchants. But keeping fraud management up-to-date in an expanding global market
requires merchants to keep pace with advances in technology, and a step ahead
of fraud. Underperformance can amount to huge revenue sacrifices in the form of
chargebacks and lost customers.

Riskified has processed hundreds of thousands of online event ticket orders

for industry-leading vendors. Our merchant partners include global retailers and
Fortune 500 companies. Using our extensive database, we develop accurate
machine learning risk models. Our industry-specific expertise, along with a deep
understanding of fraud patterns across global markets, lets our partners in the online
ticket vertical benefit from higher approval rates, while minimizing customer friction.
Cutting edge fraud detection methods - including data enrichment, proxy detection,
device and browser fingerprinting, elastic linking, machine learning models, and
behavioral analytics - all enable Riskified to make precise decisions in real-time, while
providing merchants with a full chargeback guarantee in case of fraud.

We hope this report has highlighted key fraud trends in the online event tickets
industry and will help merchants optimize their fraud review process, from data
collection to analysis. Retailers should bear in mind that this report reviews data from
a wide range of merchants, but individual sellers must pinpoint the fraud patterns
that are unique to the space they operate within: their specific product ranges and
geographies. Doing so can create benchmarks against which fraud can be assessed
and isolated.

We are happy to provide advice on any online fraud management challenges you are
facing. You can visit our website or contact us directly at sales@riskified.com.

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