‘Tis the Season of Giving… and Stealing

Posted by Joe Musitano on Nov 14, 2018 11:02:45 AM

card fraudWhile Santa may be prepping for his annual trek down the chimney, the holidays are also the time of year when fraud goes through the roof. Last year, fraud attempts increased 30% during the holiday season and identity theft was at an all-time high in 2017 with 1,579 data breaches and 133,015 reports of credit card fraud. Fraud management is a constant challenge and is more difficult during the holidays as the volume of purchases increases exponentially. Here are six tactics to improve fraud management in the coming months.

  1. Prepare for a Surge of Transactions. For orders that are reviewed manually, it’s important to consider how these will be handled. It will become difficult to not only keep up with the review process, but manage customers’ expectations as well. As fraud and order quantity increase simultaneously, decreasing the number of orders that need to be reviewed manually will be a huge help.

  2. Estimate Fraud Tolerance. The equation of fraud tolerance can be tricky to get right. If security is too tight then legitimate customers may get turned away due to friction at checkout, which leads to high dissatisfaction rates. On the other hand, if fraud tolerance is too low, then fraud rates will grow - especially during the holiday season when order quantities are much higher than usual. While the average fraud rate is around 0.9 percent, many can expect it to increase during the holidays. By considering operational costs, revenues, and fraud loss, coming up with an expected loss threshold will help minimize fraud loss and maximize efficiency and profits.

  3. Consider Holiday-Friendly Screening Practices. There are certain screening practices that should be reconsidered for the holidays, mainly matching the billing address to the shipping address. During the rest of the calendar year, ensuring that the billing and shipping addresses match is a great screening tactic. However, during the holiday season, this practice can mark good customers as fraudulent. Many people buy gifts and ship them to their loved ones. Reducing this filter for regular customers will push through good purchases without a hit to your fraud strategy.

  4. Avoid Helping Fraudsters Make More Purchases. Marketing databases that are not cleaned regularly could encourage fraudulent activity. Sending a marketing email to someone who has made a fraudulent purchase in the past serves as an invitation for them to do it again. It shows them that your organization is either unaware that fraud was committed, or that the customer has not been blacklisted from the site. Make sure marketing databases are clean before sending out those promotional holiday emails to avoid encouraging fraudsters to make illicit purchases.

  5. Ensure There is Enough Staff to Process Returns. While many consider hiring extra staff to process the surge of holiday orders, it’s easy to forget the other side of the equation. Increases in purchasing before the holidays will lead to an influx of returns thereafter. If a return isn’t processed in a timely fashion, chargebacks will start popping up left and right. Having enough staff members to manage the return process as they come in will make for a much smoother post-holiday season.

  6. Employ Automation with Signifyd. There are applications on the market that help to automate fraud detection, monitor ecommerce activity, and provide guaranteed fraud protection to retailers. Signifyd works to minimize fraudulent activity and streamlines the process of making a claim in the case that fraud does occur. With features like auto-fulfillment, auto-cancellations, and timely pay-outs, it’s no surprise that many organizations rely on services like Signifyd to help manage fraud, especially during the hectic holiday.

The holidays are known as the season of giving, and with the above tips, it doesn’t have to become the season of fraud as well. Adapting your fraud strategy to unique circumstances that occur during this time will prevent fraud and keep customers happy.


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