How To Survive Black Friday With Your Identity And Wallet Intact
Black Friday is upon us and retailers of all shapes and sizes are launching what is predicted to be yet another sales bonanza, with the UK alone expected to spend more than GBP 10 billion over the five days from Black Friday to Cyber Monday.
One of the key developments this year is the boom in popularity of Black Friday in Europe. According to the latest figures from online payment specialist, Ingenico ePayments, spending growth across the European Union is expected to overtake that in Black Friday’s place of birth – the USA – this year. Spending uplift in the EU is expected to be more than 350% above an average Friday, more than double the 162% spend increase in the US.
Increased spending, increased fraud risk
All this consumer spending, of course, is a boon to retailers in the lead up to Christmas. However, it does present a challenge for merchants seeking to protect themselves and their customers from the risk of “card not present” fraud.
Peak sales periods like Black Friday are irresistible for fraudsters. The spike in online visitors and the unpredictable spending patterns of regular customers are the perfect disguise, making it harder for merchants to sort legitimate spending behavior from fraudulent activity.
In the bustle of spending, not just between Black Friday and Cyber Monday, but throughout the rest of the festive shopping period up to Christmas Eve, it can be challenging for retailers to spot genuine fraud. Nevertheless, they need to do all they can to prevent it, as the cost of fraud and chargebacks can have a significant impact on profit margins.
Tackling the risk
By correctly identifying suspicious behavior, users and devices, as early as possible in the transaction process, and distinguishing them from genuine activity, it is possible to prevent fraudulent purchases before they are made, while allowing legitimate transactions to go through unhindered. Getting this balancing act right can help merchants ensure they benefit from all the rewards that Black Friday can bring.
But how can this be achieved? Here are RISK IDENT’s five golden rules to help ecommerce merchants stop fraud in its tracks this Black Friday:
1. Verify and authenticate
On peak fraud days like Black Friday, it is even more important for retailers to ensure that their customers are genuinely looking to make a purchase. Implementing identity verification and transaction authentication protocols can help retailers ensure that the purchases are legitimate, and the shopping account is truly under the genuine customer’s control.
2. Combine AI and human oversight
Identity verification is not always enough on its own to tackle fraud – retailers need to ensure they monitor their customers’ buying behavior as well to spot any suspicious activity. On peak days like Black Friday, retailers are increasingly recognising the benefits of artificial intelligence (AI) to help achieve this. AI is an invaluable weapon that helps analyze multiple transactions and data points simultaneously, but it cannot be relied on to correctly spot fraud and act on its own. Incorporating the insight of expert human fraud managers into the process can help retailers correctly analyze the findings of the AI system to ensure optimum vigilance against fraud.
3. Find the source of fraudulent activity
To maximize their gain in a short timeframe, fraudsters will often use the same device – laptop, tablet or mobile, for multiple illegitimate transactions. Identifying when a single device is being used – or whether its location is being masked – when making purchases across several different accounts can help retailers locate the source of fraudulent activity, so they can take steps to stop more illegitimate transactions occurring.
4. Use tools to spot account takeovers
Customers’ spending patterns change vastly from their usual behavior on a major sales day, like Black Friday – they will purchase items they wouldn’t normally consider, and their shopping baskets will be significantly larger. This can make fraudulent activity much harder to spot with traditional automated algorithms and rules. Machine learning technologies are ideal for cutting through this background noise, enabling retailers to identify a combination of suspicious factors that suggest an account is being used by an unauthorized person.
5. Reduce the risk of false positives
No piece of customer data on its own can be used to accurately spot fraudulent activity. It’s important for a human fraud manager to analyze all sources of information together to create a complete picture of transaction activity. This way, ‘good’ purchases can be correctly sorted from ‘bad’ ones, allowing retailers to reject illegitimate transactions, while accepting genuine ones, ensuring a frictionless experience for customers.