Annual Shopping Bonanza is Both a Blessing and a Curse
It’s Fall, and as the leaves turn gold and the nights get longer, the heads turn to Black Friday. For consumers and merchants alike, the annual shopping bonanza is both a blessing and a curse. Shoppers bag their best bargains – yet not without a (sometimes literal) fight – and stores see their highest footfall. However, with the good comes a negative consequence: fraud.
As we become increasingly used to faster payments, customers are demanding frictionless checkouts, often indirectly penalizing merchants by abandoning shopping baskets if they are slowed by any customer authentication, put in place by retailers to protect them from fraudsters.
Most of the time, merchants can keep on top of fraud with prevention systems which monitor patterns of consumer purchases. If, for example, Larry the 63-year-old feline fanatic buys a £200 cat mansion for his 3 kittens, this is his ‘normal’ customer behavior. If Sylvie the 22-year-old Olympic rower who hates cats bought this, it would be a potential signal that it was someone on her account. Equally, if Larry suddenly purchased £4,856 worth of cat food, this would trigger alarm bells with fraud prevention – he owns 3 kittens, not 30 tigers.
This is identity fraud – the deliberate use of someone else’s identity as a method to gain a financial advantage or obtain credit and other benefits in the other person’s name. In the UK in 2017, identity fraud reached epidemic levels, with incidents of this type of fraud running at almost 500 a day.
This is manageable though, as merchants can easily track their consumers’ purchases throughout the year – after all, people follow patterns of behavior. Problems arise for fraud prevention when genuine customers start to exhibit unusual behavior on peak sales days such as Black Friday. On days like this, savvy savers who usually spend £500 in a month may splash £500 in one day.
If the shift in consumer patterns interrupting fraud prevention accuracy isn’t bad enough, the run up to Black Friday and Cyber Monday is also the time where fraudsters up the ante with fraudulent links in emails and WhatsApp messages. This time last year, consumers were warned of a Black Friday set to be the most fraudulent on record, with a predicted 40 million text scams to be sent to unsuspecting customers. Things aren’t any different now. This evidently has a negative impact on consumers, but for retailers too, whose genuine messages often get caught up in the spam – messages that can wreak havoc on their sales and reputation.
So how can merchants keep ahead of fraud this holiday season? Here are our top tips for staying secure online this Black Friday:
- Use device fingerprinting for identification – Fraudsters want the biggest rewards in the shortest space of time.
- Reduce false positives – Analyse all sources of customer data in combination with each other to give you a full picture of transaction activity so you can confidently accept genuine transactions and block fraudulent ones.
- Identify account takeovers – Use machine learning technologies to help you identify a combination of suspicious factors that indicate the account is being used by an unauthorised person – don’t depend on rules.
- Review high-risk transactions – Combine Artificial Intelligence with knowledgeable fraud managers to help flag suspicious activity and provide a stronger defence against fraud.
Get in touch with our team under firstname.lastname@example.org today to find out more about protecting your business this Black Friday.