June 29, 2020
By Rich Stuppy, Chief Customer Experience Officer, Kount
While many of us celebrate the United States Independence Day, it’s important to remember that fraud doesn’t take a holiday. Businesses across industries should be aware that fraud risks actually increase over U.S.-focused celebrations. Criminals assume that less oversight gives them a wider window to launch attacks.
Consider this anecdote: Two to three years ago, over the U.S. Labor Day holiday, a Kount customer released a new set of features designed to improve the functionality and experience of their digital offering. Within 72 hours after the launch, they were hit with a significant fraud attempt that located a loophole in the new feature. Luckily, Kount noticed an irregular signal that suggested an intense and significant attack. We immediately warned our customer and they were able to dig into the anomaly and stop it – avoiding damage. Had we not warned them, the situation could have been devastating.
Another anecdote: Last Independence Day, a news report detailed a successful fraud attack on a business that was not a Kount customer. A multi-national fraud ring was opening accounts under fake business names during the week in advance of the 4th. While many were out of the office over the 4th of July holiday, criminals began the process of account takeover, shipping money into new accounts plus withdrawing more than $20 million over the span of 72 hours.
Unfortunately, fraud risk increases over holidays. Since traditional work practices are on hold, there are fewer people in the office, defenses are down, and there is less risk oversight. Criminals think that the likelihood of success may be higher over a three-day weekend when attention is focused on families. When businesses have limited oversight, fraud sees the opportunity to launch attacks.
Over other long weekend holidays, Kount has seen fraud attacks that include:
Sophisticated fraud attempts involve advance planning. In many instances, fraudsters plan ahead with probes to test defenses, find vulnerabilities, determine if there are weaknesses in terms of fraud prevention, and then after rigorous planning, they launch attacks while many are out of the office.
Don’t let your guard down over the forthcoming 4th of July holiday. Before you and your colleagues leave for the break, remember that there is another set of risks to consider. Over particularly U.S-centric holidays, an undercurrent of anti-western and anti-U.S. sentiment drives fraud attacks on U.S. merchants. Many foreign national fraudsters have a sense of pride if they “stick it to Uncle Sam” over a big U.S. holiday.
Because Kount has been protecting customers for more than 13 years, our risk pros know what they are protecting against. Now is the time to double-down and double-check any features or flows that lack adequate protection. This is especially important when the machinery isn’t in place yet or there are new releases executed since the last holiday. This includes items that haven’t been widely exploited previously.
In addition, when your fraud analysts return to the office, we recommend that a stringent process needs to be in place so that fraud doesn’t sneak through. When faced with a backlog of orders to review, many analysts may accelerate approvals and speed up processing to make the sale and ship products quickly. Or, there may be an increase in false positives, since consumer sales behavior changes over the holidays. With the additional free time, customers may choose to make additional purchases or purchases that are out of the ordinary. These may be flagged as suspicious when manual review takes place.
Balancing false positives, customer service and fraud protection with business objectives is a never-ending game and if we aren’t vigilant, then we don’t know what new risks are coming.
Kount’s solutions are prepared to stop chargebacks, fraud, and account takeover with the largest network of trust and risk data, linked by adaptive AI for real-time protection and reduced customer friction. We will remain focused on our customers’ security over the holiday and every day.
Enjoy the long weekend and have peace of mind knowing that your business is protected from fraud attacks.
Rich Stuppy: For more than a decade Rich has been involved in developing fraud mitigation, compliance, and big data strategies. Rich came to Kount after 14 years with a fortune 50 retailer. Collaborating directly with customers, he works to inform Kount’s product roadmap, identify new and emerging threats, and drive innovation for ultimate customer satisfaction.