The Season of Fraud Is Coming. Are You Prepared?
Every time the holiday season approaches, it comes with brand new opportunities for fraudsters. Black Friday and Christmas are around the corner, which means not only an increase in sales, but also the peak season for cybercriminals. How can you protect your business from fraud?
It goes without saying that it’s better to plan ahead, but if for some reason you haven’t prepared for the holiday season yet, here are some fixes you can implement right away.
Fraud comes in a variety of shapes and sizes, and the Nielsen report states that US credit card losses are expected to exceed $12 billion by 2020. The bad news is that you can be sure that cybercriminals are ready for the holidays. Keep in mind that criminals usually target products that come with high resale value, which is a real threat to your bottom line.
No time to read? Here’s a handy checklist on how to deal with rising fraud during this holiday season
The true cost of fraud
The true cost of online fraud might surprise merchants as, according to Signifyd, it is costing retailers 5.4% of revenue.
Moreover, EMV technology made it more difficult to commit fraud in a brick-and-mortar store, as it’s hard to duplicate chip cards, so more fraudsters are moving online and target e-commerce stores like never before. With that being said, remember that many accounts in online stores are fake and are mostly used for fraudulent activity. Especially now, when the hectic pace of the season makes merchants and customer service team members less attentive.
Overall, fraudsters are always trying new ways of stealing money, while merchants are too busy to spot their attempts. This is why heading into the holiday season should come with having a laser focus on keeping customer data untouched.
Don’t leave money on the table
Employ steps to prevent fraudulent activity. At first, it’s good to have the address verification system in place to check whether the customer’s address matches what’s on file with the cardholder’s bank. However, keep in mind that legitimate customers also can enter a typo when they fill out the checkout fields or that fraudsters can steal card details with the billing address information.
What about manual reviews? In many cases, human reviews aren’t the best and effective solution to catch fraud. Another thing is that some online stores hire temporary or seasonal workers to manage the number of orders, so they could not be that familiar with transactions as regular workers. This means that it could be more difficult for them to recognize suspicious activity.
Set rules that help flag suspicious orders that then are blocked or placed on hold for manual review. However, take note that when you use complex and too strict anti-fraud rules, it can lead to false declines, so you’ll reject legitimate transactions.
Implement a multi-layered approach
You can also check new orders against the blacklisted accounts that have a history of suspicious or fraudulent attempts. Plus, monitor why credit cards are declined (read more about card decline codes).
Use 3D Secure authentication as an extra security layer in your checkout. Regular 3DS is considered a conversion killer, as it adds another step for customers during checkout, so this is why we’ve implemented a non-invasive 3D Secure. It provides you with more flexibility, minimizes the number of chargebacks and doesn’t cause a drop in conversion.
Moreover, ask your payment provider about machine learning solutions that flag suspicious charges automatically, which is much faster than a human analyst. The system constantly learns from millions of transactions to identify buying patterns and spot anomalies in real-time.
In general, AI is used by online store owners more often, usually for powering product suggestions. But, it can also help when it comes to fraud detection, as artificial intelligence allows implementing dynamic rules that change as soon as fraudsters implement new behavior. Static rules could not be that effective.
Keep in mind that you don’t have to invest a large amount of money in security, as you can have all you need for your business protection attached to a reliable payment solution, so choose your payment provider wisely.
Don’t make your store easy mark for fraud
With the growing number of online stores, Black Friday offers and holiday deals, consumers are more likely to make online purchases than ever before. This is why merchants need to find the right solutions before they lose significant volume. They should also think about more advanced ways of customer verification, such as a biometric authentication.
Also, it’s always good to follow reports that pinpoint the latest fraud trends and new ways of stealing money online in order to stay updated and ready to fight fraud. The more you know, the better you’ll be prepared for the hectic time of year. Now it’s time to answer for yourself: Are you ready for the fraud season?
Latest posts by Sandra Wróbel-Konior (see all)
- Payment Podcast: The Biggest Challenges in the Payments Industry and Solutions for Merchants - September 1, 2020
- COVID-19’s Impact on the Online Payment Industry - August 12, 2020
- The Challenges of Gaming Payment Processing - July 28, 2020