June 26, 2018
Before we know it, we’ll be entering the busy holiday retail season. With the holiday season brings a spike in sales and a spike in fraud, with some estimates putting the increase at as much as 30 percent over typical fraud rates throughout the year. This means that the joyous holiday season is followed by the less-than-festive chargeback season, when buyers contest purchases and banks are forced to go back to their merchant-pool and collect consumers’ (claimed) losses.
It is during the holiday season that retailers see the explosive growth of commerce in the mobile channel, with nearly one-third of merchants surveyed believing the mobile channel will represent at least half of their total revenue by 2020. Unfortunately, many merchants continue to be careless about this certain threat across all channels, especially mobile. The recently-released 2018 Mobile Payments and Fraud Survey underscores this lackadaisical attitude, with a full 15 percent of merchants surveyed reporting uncertainty about their risk management strategies for the mobile channel, suggesting little or no fraud prevention strategy – a scary reality given the impending holidays and certain mobile commerce spike that accompanies the season.
Don Bush, Kount’s VP of Marketing agrees: “For the third consecutive year, merchants are showing signs of complacency and even regression in terms of managing mobile fraud risk.”
And, the share of merchants who say that the mobile channel requires specialized tools for risk management is at the lowest recorded level in all six years of this study. Continued Bush, “Despite the increase in mobile fraud and the evolution of tactics carried out by criminals to commit fraud in this channel, the number of merchants implementing specialized tools has decreased, demonstrating that merchants struggle to properly address fraud in the mobile channel, including both apps and mobile browsers.”
The time is now for merchants to ensure anti-fraud strategies are considered and implemented. Here are some tips for merchants to start preparing for the busy retail season:
- Knowledge is power: Understand your historical rate of fraud and create benchmarks for the year to come. After all, it’s near impossible to win a battle if you go in with blinders on.
- Understand that all of these things are not like the other: No two industries or businesses are exactly alike when it comes to fraud trends and tactics, so your fraud prevention strategies shouldn’t be either. Determine what approaches and tools make the most sense based on the behavior of your customer base – legitimate or otherwise.
- Think in multiples: One tool can be defeated if a fraudster tries hard enough. Adopt and deploy a multi-layered fraud solution that incorporates multiple screening technologies and tools to defeat these bad actors.
- Think in multiples, part deux: Put anti-fraud measures in place throughout the purchase funnel, not just at the initial selection or checkout.
- Tailor your strategies for each payment type: Each payment platform – be it online transfers, mobile wallets or credit cards — presents a unique weakness that can be exploited by fraudsters. Understand those specific holes and work with partners that can tailor fraud strategies for each platform.
- Be human with your machines: While AI and machine learning have transformed anti-fraud strategies, machines alone can only go so far and are not infallible. Layer technology with human brainpower to intelligently understand and fight fraud.
- Don’t DIY: Partner with the experts that have historical knowledge and global intel when putting fraud prevention strategies in place. No one ever said it’s easy to see the forest through the trees.
So, contrary to popular belief, the holiday season doesn’t commence with Thanksgiving. For merchants, it starts now. Start understanding how to reduce your fraud losses today and you’ll be sure to thwart Bad Santa’s while you watch your profits soar.
Kick off your holiday season prep by discovering 8 proven strategies to thwart chargebacks in our eBook, “Win the Chargebacks Battle: 8 Proven Strategies”.