The holiday season is make-or-break time for e-commerce retailers. Unfortunately, the holiday season also attracts savvy fraudsters who anticipate that many merchants will be so busy they let their typical fraud prevention strategies slip a little.
All the more reason why merchants need to up their fraud protection game during the holidays to avoid any unwelcome surprises.
The Holiday Uptick in CNP Fraud
Card-not-present (CNP) fraud can rise by over 20 percent during the holiday season, starting with Black Friday and Cyber Monday and lasting all the way through to the end of the year. Items targeted by fraudsters during the holidays have an average ticket value of $215.
High sales volumes, tight shipping timeframes, and the lure of easily resalable goods entice fraudsters during the holidays. Common attack modes include:
- Account takeovers, in which criminals hack into customers’ accounts to make purchases for themselves.
- Mobile user data attacks, which focus on customers’ mobile devices (a channel that can account for more than half of holiday e-commerce orders).
Additionally, popular new trends in e-commerce sales – such as Buy Online Pick-up In Store (BOPIS) and same-day/next-day shipping – may make it more convenient for customers to shop for and send their gift orders. But these trends also present new opportunities for perpetrators of fraud.
For example, many merchants who offer BOPIS sales do not require a physical ID or credit card to pick up the order – meaning it can be nearly impossible for the merchant to validate the identity of the customer.
Same-day and next-day shipping are similarly problematic. Fraudsters love fast shipping timeframes, in the hopes that merchants will cut corners in fraud protection in their haste to get the shipments out of the warehouse and en route to the “customer.”
Strategies to Implement in July to Prevent Fraud in December
Merchants who wait until the leaves change to create a fraud protection plan may find they’re doing too little, too late. True, there are so many things to take care of during the holiday season – maintaining inventory levels, securing and training seasonal help, packing and shipping orders … it’s not surprising that preventing fraud may fall to the bottom of the to-do list.
But considering that fraud can take a nearly 1.5% chunk out of a merchant’s revenue, it’s worth getting serious about fraud protection now, while the most wonderful time of the year is still months away.
Here are a few strategies for stopping fraudster grinches from walking off with your holiday profits:
Get a Handle on Your Fraud KPI Benchmarks
When learning to detect and prevent fraud, a merchant should first get clear on what “normal” means for their business. Only then can the merchant understand what isn’t normal and what should be setting off alarm bells. (Download this ebook to better understand your own e-commerce fraud risk.)
Be Prepared to Adjust Your Identity Verification Strategy
Even basic identity verification methods can go a long way toward shutting down holiday fraud. And yet, standard fraud detection measures may need to be adapted for unique holiday shopping behaviors.
For example, address verification systems (AVS) match a customer’s billing address with the address their bank has on file. Typically, a mismatch between billing and delivery addresses will flag a transaction as possibly fraudulent. During the holiday season, however, many customers order gifts that are sent directly to the recipient, not the customer. This can create a headache for merchants who haven’t planned ahead to adjust their fraud detection strategy.
Choose a Fraud Protection Partner That Knows Your Business
Every e-commerce business is unique, and so are the habits of online shoppers during the busy holiday season. It’s therefore essential to work with a partner able to tailor a fraud protection strategy to fit your company – and also able to manage your sales peak seasons without breaking a sweat.
That means sorting out the legitimate customers from the fraudsters. At ClearSale, we tackle this issue with a combination of cutting-edge machine learning technology and a highly trained team of fraud-detection experts.
Contact us now to talk about getting ClearSale on your side this holiday season (or anytime).