Celebrate More Revenue this Holiday Season

The holiday shopping extravaganza is well underway, fueled by a unique blend of inflation, inventory challenges, and supply chain uncertainties. Consumers, eager to secure gifts before prices surge, are continuing the trend of diving into holiday shopping before December rolls around. As this festive spree gains momentum, so does the risk of fraud. Predictions for Q4 2023 reveal friendly fraud as the leading threat, with an anticipated attempt percentage of 20%, followed by 3% for account takeover and 1% for promotional abuse. ACI Payments has also reported an increase in BNPL fraud attempts, citing a near 6% increase in Q3 2023 as compared to last year and further predicting a 2% increase this holiday season.

Reducing fraud and prioritizing customer experiences across all devices is crucial to capturing more revenue this holiday season.

1. Eliminate Fraud

Learn about common fraud tactics and how to detect and prevent them. Any indication of deception or disguise should raise a red flag. Fraudsters will attempt to mask their true identity, so using a proxy, a burner phone, creating a new email address, or shipping to a freight forwarding company are often telltale signs of fraud, and those orders should be carefully scrutinized.

Another area of concern is identifying fraudulent chargeback claims. Dissatisfied customers may dispute a charge out of disregard for the merchant, out of spite in response to a negative experience with a business, or as an easier alternative to returning an unwanted item. Good customer service and an easy-to-follow return policy are reliable defenses against this type of fraud. Repeat offenders should be put on a customer block list, and effort must be invested in gathering evidence and composing compelling chargeback representments to win fraudulent chargeback disputes.

2. Improve Customer Experiences

The second objective in effectively reducing fraud-related costs is ensuring that
your fraud prevention solution is not rejecting legitimate customers or causing
shoppers excess friction. An easy way to improve customer satisfaction is by offering a guest checkout for new customers and autofill options for returning customers. This will save customers time and effort at checkout. Not burdening your customers with unnecessary data collection or necessitating the registration of a store account will increase conversions.

A Longer Holiday Season = Extended Fraud Risk

McKinsey partner, Tamara Charm, says that this year’s shoppers are showing different shopping behaviors. Most noticeable is a general down-trade mood amongst consumers. Although consumers may be in decent financial shape, there is an air of pessimism and shoppers are downtrading because they’re worried about what might come next.

Charm also says, “consumers — rather than rushing to the shelves, to their phones, or to websites to buy something before everything runs out — are instead lengthening the holiday season. Their number-one concern is, ‘When can I get the items that I want at the best price possible?’”

Be sure to have a seamless checkout experience for shoppers when they are ready to buy. Fraud prevention measures that hinder a smooth customer journey will result in abandoned carts and lost revenue. Use fraud protection solutions that reduce false declines and remove friction during checkout.

Anticipate an Increase in Friendly Fraud

A spike in chargebacks will inevitably follow a spike in sales. Even when you are properly vetting your customers, legitimate cardholders often submit fraudulent chargeback claims. This is known as friendly fraud or chargeback fraud.

This type of fraud is difficult to detect preventatively but can often be won via proper chargeback representment. Keeping good records and encouraging customers to reach out directly to your business if they are unsatisfied with their purchase will help mitigate friendly fraud.

The Soft Underbelly of ecommerce

Businesses that rely on manually reviewing orders for fraud will be more vulnerable during peak seasons when teams are spread thin, and fulfillment centers are flooded with orders. Fraudsters often exploit this vulnerability and place their orders in the early morning and add expedited shipping in hopes that the fraud team will be too overwhelmed with getting orders shipped and will be lenient with fraud review. Look out for suspicious orders placed at odd hours to stay protected against fraud opportunists.

Regular Day vs Holiday Season number of false declines

The State of Fraud Report highlighted several types of attacks that are likely to remain prevalent through the crucial holiday shopping period.

Types of Fraud Attacks to be on the lookout for:

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Other fraud attacks to look out for

Founded in 2014, NoFraud is an ecommerce checkout and fraud prevention pioneer, ensuring every ecommerce merchant has access to the services and protection they need to scale with confidence. The company provides online merchants with cost-effective, easy-to-use solutions that remove friction and fraud from their ecommerce funnel to grow sales and improve the purchase experience for customers. NoFraud provides the industry’s most accurate ecommerce fraud protection solutions to increase merchants’ conversion and approval rates while virtually eliminating fraud. Visit www.nofraud.com for more information.

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