In 2020, the COVID-19 pandemic drove millions of consumers online. People needed a convenient and safe way to buy essential products, and shopping online was the way to go. Today, data shows that those online shopping behaviors aren’t going anywhere. Consumers will continue to shop online, especially during the holidays. Meanwhile, fraudsters have noticed this shift in consumer shopping behavior and constantly look for vulnerabilities across the entire online shopping journey.
While you may think you have plenty of time to prepare for the holidays, time goes by fast. And if your current fraud prevention solution can’t handle the below four things well, or at all, you should start upgrading your system now.
1) Spikes in New Users
With more consumers turning to online shopping, expect to see spikes in new users during the holiday season. Unfortunately, many merchants turn away new customers because they use fraud prevention solutions that have limited visibility into customer identities. In fact, new users are 5-7X more likely to be falsely declined than returning customers because of a lack of data.
When you wrongly decline new users, you often miss opportunities to convert them into buyers and possibly loyal lifetime customers. You need to make sure your system has access to a larger external network of identity data so that it can distinguish between new legitimate users and fraudsters.
2) Convenient Delivery Options
Many consumers have embraced convenient delivery options like same-day delivery and Buy Online Pickup In-Store (BOPIS). During the 2020 holiday season, stores that offered convenient services like BOPIS saw their sales rise 49% on average over 2019, while stores that didn’t offer these options saw about a 28% rise.
You need to offer your customers fast and convenient delivery options year-round, especially during the holiday season—but you can’t without an automated fraud prevention solution. Legacy solutions that rely on rules and manual reviews can’t evaluate transactions fast enough to offer these services.
3) Account Takeover
If you fail to maintain the trust of your customers, they will shop elsewhere. And maintaining that trust involves protecting customer accounts. However, fraudsters often obtain account usernames and passwords through dark web marketplaces and phishing attacks. Without the right fraud prevention solution, fraudsters who take over accounts will go unnoticed.
You need a fraud prevention solution that can block automated ATO attacks and can detect when an account has been compromised. And that solution must detect ATO fast—once a fraudster takes over an account they quickly engage in fraudulent activities. In fact, 40% of the fraudulent activities that occur with an account takeover happen within 24 hours.
4) Returns Abuse
Most consumers expect merchants to offer convenient and flexible returns options. So, you need to offer customers convenient ways to return merchandise, especially those looking to buy gifts. However, the holidays bring out policy abusers and fraudsters. In 2020, fraudulent holiday returns to U.S. merchants equaled about $10.2 billion.
Legacy fraud prevention solutions can prevent basic returns abuse, but they aren’t sophisticated enough to prevent omnichannel abuse like Buy Online Return In-Store (BORIS) fraud. You need a fraud prevention solution that allows you to seamlessly enforce your returns policy across all types of purchases—BOPIS, BORIS, curbside pickup, and online with standard delivery.
Are You Ready for the Holidays?
We’ve highlighted four things your fraud prevention solution must handle, especially during the holiday season. Do you think your system is ready?
Check out how our clients have prepared for the holiday season with Forter.
Test your preparedness by taking our quiz.