The holiday season is the most important time of the year for online businesses. While an increased number of shoppers are perusing ecommerce sites, an increased number of bad actors are, too. Even though Christmas is behind us, the holiday selling season is not over. Many consumers will take advantage of post-holiday sales and begin redeeming gift cards received during the holiday season (typically spending more than the gift card amount). Without the right ecommerce fraud prevention tricks, merchants are at risk for serious losses. It’s important to have the right tools in place to combat fraud year-round, but merchants are especially at risk during this busy time of year.
ACI Worldwide found that attempts to commit fraud online during the 2017 holiday season increased by 22% year-over-year. Additionally, the company found that overall online transactions were up 19% compared during the 2017 holiday season compared to the 2016 one.
This research helps to paint the picture of how prevalent fraud is in the online retail world nowadays as cybercriminals capitalize on ecommerce sites’ vulnerabilities. Here are the best ecommerce fraud prevention tricks your business should implement for the holidays.
Clearly Defined Rules and Communication
Every person involved in helping your online business run smoothly should be trained to identify potentially fraudulent activity. They should also know how to handle these situations, including working with other departments in separating true fraud attempts from false alarms.
One of the top ecommerce fraud prevention tricks is to create checklists designed to minimize risk. These checklists can be shared with team members and help to identify situations that may throw a “flag”. This may include an unusually high number of orders originating from a certain location, inconsistent patterns in purchasing behavior, or other suspicious activity. Staff should also be aware of processes for approving and declining orders as well as escalation paths for each situation.
Ideally, business owners should train each staff member to understand the fraud-prevention tools that have been implemented. This can streamline operations when orders are rushing in. It is much easier to maximize legitimate sales if each team member knows how to identify potential fraud and react to suspicious activity to prevent chargebacks and loss merchandise from taking a bite out of business.
Similarly, every team needs to be aware of what is going on during the holiday season from a marketing perspective in order to identify whether or not online traffic increased due to holiday promotions and coupons or nefarious activity. Everyone should be aware of new product releases and volume expectations to ensure that legitimate sales are not being declined due to a misunderstanding.
This is one of the most important ecommerce fraud prevention tricks as keeping the lines of communication open across multiple teams can help every staff member identify and flag fraudulent activity in real-time.
Monitor Transactions and Fine-Tune Fraud Controls
The best ecommerce fraud prevention tricks help merchants stop fraud and chargebacks, saving thousands of dollars in losses during the holidays. Monitoring sales during the holidays is integral. Ecommerce businesses should monitor accounts and transactions for any potential red flags, including billing information that differs from the shipping address.
Automated fraud prevention tools run the gamut. Consider implementing tools that identify customer IP addresses. Geolocation tools can identify transactions originating from a country that is known for fraudulent activity. Alternatively, they can also identify “high-risk” IP addresses that have been flagged for fraudulent activity in the past.
Minimize False Declines Without Sacrificing Security
Flagging “unusual” activity can be a slippery-slope for businesses during the holidays and may hamper seasonal earnings potential if fraud controls are too strict. Merchants can research the types and patterns of transactions the business experienced during the previous holiday season to help anticipate what may be expected this year. These learnings can help inform settings for fraud tools to ensure that legitimate transactions are not unnecessarily declined.
Also consider additional steps to take rather than declining a suspicious transaction outright. Instead of flagging a transaction or escalating a dispute, merchants can request that the customer authenticate themselves through additional means to confirm their identity. There should be a healthy balance between enabling frictionless transactions and properly authenticating customers. Onerous checkout experiences can impede on the customer experience and damage a brand’s reputation.
Bulking up customer service teams another way to manage customer expectations and reduce fraud. Having a well-staffed team to handle customer questions and concerns can alleviate the stress customers feel, leading to a better brand experience. It can also reduce post-holiday chargebacks from customers who use the dispute process because they were unable to easily contact a business for returns or other issues.
Our team at PayArc can help you enjoy a smooth and profitable holiday season as we implement the top ecommerce fraud prevention tools in the industry. Contact us today to see how we can help your business reduce fraud and boost sales this holiday season.