If you’re currently focused on summer vacations, you might not welcome a reminder about the holiday season. After all, it’s still months away. Right?
I spend a lot of time talking to fraud-fighting professionals, and one thing I’ve noticed over the years is that the ones who aren’t tearing their hair out during the holiday season are the ones who prepare early.
So, do “future you” a favor and use the summer to get sorted long before the words “code freeze” swim into conversations and remind you that if you’ve left it too late, it might be too late.
Fraud Attacks Increase During the Holidays
Forter’s data shows a generally consistent pattern from year to year on this point: during the holiday season, fraud attacks increase by 15%- 30% compared to the rest of the year. This can be easy to miss since fraud rates typically go down due to the increased level of good traffic.
Of course, this isn’t the same for every industry; if you’re in travel, seasonality means something else, and you could take this article and apply it elsewhere in your year. In most of digital commerce, though, the attack spike is significant within the winter holiday period, and fraud departments must be prepared.
While it’s hard to predict which items will be most popular ahead of time, it’s also important to note that fraudsters are 2x times more likely to target the hottest items than other goods during the holidays. Get input from experts elsewhere in the company to help you plan for the most probable scenarios.
False Declines Can Be More Deadly Than Fraud
Over 74% of shoppers have said they will abandon a brand after three or fewer bad experiences, Lauren Wallace, Sr. Manager of Editorial Content at Salesforce, highlighted in their 2024 State of Commerce report. That’s bad all year round, given that in the 2023 Trust Premium Report, nearly 40% answered that they’d experienced a false decline within the previous three months.
This is an even more significant problem during the holidays because it’s a time of year when shoppers are especially likely to try new stores. Get it wrong, and they may never come back. If that happens, the opportunity to win a new loyal customer is wasted, which especially matters at a time when 55% of customers say they’re shopping less often due to the rising cost of living.
Strong fraud detection and prevention is essential for business success. Your approach should accurately target nefarious activity without hampering legitimate purchases. The right balance builds customer loyalty and brand trust. Too many false positives and expensive manual reviews frustrate customers, while loose fraud rules that don’t stop bad actors can damage a brand’s reputation.” via Salesforce Ecommerce Checkout Guide
Many merchants struggle with this challenge because it’s harder to be confident in new users or returning dormant users during the holidays. People are more likely to buy items that are atypical for their spending patterns, send to addresses they haven’t used before, or use different payment methods to spread the financial load out.
It’s a tricky problem, especially with margins shrinking in recent years. According to Salesforce, brands and retailers will incur an extra $197 billion in middle- and last-mile expenses — a 97% increase from 2023. However, solving it for your organization is much easier if you start early rather than forcing yourself to work under a time crunch.
The Fraud Fighter’s 2024 Holiday Checklist
At Forter, we always start preparing for the holiday season in the summer, so I’m used to this routine. I’ve got some tips to share to help you check off all the items on your list so it looks nice, not naughty.
Like most of the challenges I love most in fraud-fighting, the real issues come down to identity, collaboration with other departments, and the need to see fraud prevention as revenue optimization rather than cost reduction.
I’ll be exploring these and related topics on What the Fraud? between now and the holiday season, so follow me to stay up to date!