Holiday Season Risks: Protecting New and Existing Digital Channels

The events of 2020 have permanently changed the buying behaviors of consumers. Now, and long after the holiday season wraps, digital businesses must adapt and innovate to stay profitable. Consumers have quickly embraced new digital channels, including mobile order ahead, Buy Online, Pick Up in Store (BOPIS), curbside pickup, and similar models. And they’re also relying more on existing channels, such as eGift cards, digital experiences, and expedited shipping options. New or old, digital channels are a big opportunity this year.

But digital channels come with new risks. Successful BOPIS (or, Buy Online, Pick Up Curbside, or any number of similar acronyms), requires timely processing and minimal customer interaction, leaving little time for manual review. The speed and anonymity built into contactless channels make them popular targets for fraud. And because they involve card-not-present (CNP) transactions, merchants are liable for losses.

While some shoppers may still browse the store shelves this holiday season, many more will count on new methods. No matter their preference, consumers expect access to these digital channels now and into the future. To capitalize on this opportunity, eCommerce businesses need to understand the risks and implement strategies to protect revenue.

Risks Associated with BOPIS, eGift Cards, and Digital Channels

BOPIS

What Happens: BOPIS shopping helps to drive online traffic to brick-and-mortar locations where consumers may purchase additional goods. Because BOPIS pickups typically require only minimal proof of purchase, bad actors can easily use stolen credit cards or account credentials to purchase goods in order to keep or resell them.

The Damage: Without protection, this type of fraud can result in substantial product and chargeback losses. And because of its potential to increase revenue and provide a convenient shopping experience for customers, the absence of a BOPIS option can cut off a critical path to growth.

Did You Know?

41% of Americans say that even after the pandemic subsides, they will continue to make most purchases online OR make more purchases online but not as much as during the pandemic.

Get the Data

eGift Cards

What Happens: eGift cards offer quick revenue and contact-free gift options for buyers. However, eGift cards can be obtained through stolen credit cards, account takeover, or triangulation fraud. Stolen eGift cards can then be used to purchase goods or resold on marketplaces.

The Damage: eGift card fraud is difficult to trace after the fact and often results in immediate losses. And when a recipient of an eGift card finds that the balance has been drained, the brand risks losing business from both the card purchaser and the recipient.

Lengthy Manual Reviews

What Happens: Untested channels demand more attention from fraud teams. Without automation, rapid spikes in volume push more transactions into manual review. And higher volumes compounded by fraudulent transactions can overwhelm operations.

The Damage: The manual review process is costly, difficult to scale, and depends on employee time. When the process fails, businesses are forced to delay orders or permit more fraudulent orders. Delayed or canceled orders can insult good customers, while fraudulent orders undercut revenue and increase chargebacks.

Shipping & Delivery

What Happens: Amazon has set a high bar for shipping and delivery expectations among consumers. Accurate windows are especially important during the holidays, and a higher volume of last-minute shoppers will rely on next-day or same- day shipping for gifts.

The Damage: The ability to meet high- volume shipping demands depends on managing inventory and focusing energy only on good orders. Companies that can’t ship quickly risk losing the sale or incurring a chargeback and fees for items delivered too late.

56% of Americans are concerned about receiving the products in a reasonable amount of time when online shopping

On average, consumers ranked free shipping (no matter the speed) to be the most important way they acquire products they order from retailers

42% of Americans say that longer shipping times make them furious when shopping online

Protecting New and Existing Digital Experiences

While some eCommerce channels may be new for some industries, they are not new for others. Kount’s Fraud Prevention & Identity Trust platform has experience with more than 9,000 leading brands across more than 250 countries and territories and 75 industries. Its AI and machine learning are already trained to detect fraud in those new eCommerce channels and regions, reducing risk in any digital expansion.

Kount recommends businesses:

  • Apply artificial intelligence & machine learning (ML) to increase approval rates for good orders and reduce false positives.
  • Deploy a new fraud prevention platform or extend your existing solution to prepare for unique fraud tactics and risks that appear when entering new channels such as BOPIS, new industry verticals, and new geographies.
  • Add the ability to identify friendly fraud in real time.

The Five Risks of eCommerce This Holiday Season

Protecting new and emerging digital channels is an important factor this holiday season, and the second risk in our Holiday Risks and Opportunities Series. Just like St. Nick, eCommerce companies need to make their list and check it twice.

Download Checklist

Get Kount’s Latest eBook

Learn the risks to monitor this holiday season, and get the checklist of effective fraud prevention to ensure you are prepared.

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Learn the risks to monitor this holiday season, and get the checklist of effective fraud prevention to ensure you are prepared.

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Holiday Season Risks: Protecting New and Existing Digital Channels
The events of 2020 have permanently changed the buying behaviors of consumers. Now, and long after the holiday season wraps, digital businesses must adapt and innovate to stay profitable. Consumers have quickly embraced new digital channels, including mobile order ahead, Buy Online, Pick Up in Store (BOPIS), curbside pickup, and similar models. And they’re also relying more on existing channels, such as eGift cards, digital experiences, and expedited shipping options. New or old, digital channels are a big opportunity this year. But digital channels come with new risks. Successful BOPIS (or, Buy Online, Pick Up Curbside, or any number of similar acronyms), requires timely processing and minimal customer interaction, leaving little time for manual review. The speed and anonymity built into contactless channels make them popular targets for fraud. And because they involve card-not-present (CNP) transactions, merchants are liable for losses. While some shoppers may still browse the store shelves this holiday season, many more will count on new methods. No matter their preference, consumers expect access to these digital channels now and into the future. To capitalize on this opportunity, eCommerce businesses need to understand the risks and implement strategies to protect revenue. For more on holiday risks, download Kount’s ebook. Risks Associated with BOPIS, eGift Cards, and Digital Channels BOPIS What Happens: BOPIS shopping helps to drive online traffic to brick-and-mortar locations where consumers may purchase additional goods. Because BOPIS pickups typically require only minimal proof of purchase, bad actors can easily use stolen credit cards or account credentials to purchase goods in order to keep or resell them. The Damage: Without protection, this type of fraud can result in substantial product and chargeback losses. And because of its potential to increase revenue and provide a convenient shopping experience for customers, the absence of a BOPIS option can cut off a critical path to growth. Did You Know? 41% of Americans say that even after the pandemic subsides, they will continue to make most purchases online OR make more purchases online but not as much as during the pandemic. [button link="https://kount.com/blog/new-research-reveals-the-ecommerce-keys-to-holiday-survival"]Get the Data[/button] eGift Cards What Happens: eGift cards offer quick revenue and contact-free gift options for buyers. However, eGift cards can be obtained through stolen credit cards, account takeover, or triangulation fraud. Stolen eGift cards can then be used to purchase goods or resold on marketplaces. The Damage: eGift card fraud is difficult to trace after the fact and often results in immediate losses. And when a recipient of an eGift card finds that the balance has been drained, the brand risks losing business from both the card purchaser and the recipient. $950M is lost to eGift Card fraud. Get the eBook Lengthy Manual Reviews What Happens: Untested channels demand more attention from fraud teams. Without automation, rapid spikes in volume push more transactions into manual review. And higher volumes compounded by fraudulent transactions can overwhelm operations. The Damage: The manual review process is costly, difficult to scale, and depends on employee time. When the process fails, businesses are forced to delay orders or permit more fraudulent orders. Delayed or canceled orders can insult good customers, while fraudulent orders undercut revenue and increase chargebacks. Shipping & Delivery What Happens: Amazon has set a high bar for shipping and delivery expectations among consumers. Accurate windows are especially important during the holidays, and a higher volume of last-minute shoppers will rely on next-day or same- day shipping for gifts. The Damage: The ability to meet high- volume shipping demands depends on managing inventory and focusing energy only on good orders. Companies that can’t ship quickly risk losing the sale or incurring a chargeback and fees for items delivered too late. 56% of Americans are concerned about receiving the products in a reasonable amount of time when online shopping On average, consumers ranked free shipping (no matter the speed) to be the most important way they acquire products they order from retailers 42% of Americans say that longer shipping times make them furious when shopping online Protecting New and Existing Digital Experiences While some eCommerce channels may be new for some industries, they are not new for others. Kount’s Fraud Prevention & Identity Trust platform has experience with more than 9,000 leading brands across more than 250 countries and territories and 75 industries. Its AI and machine learning are already trained to detect fraud in those new eCommerce channels and regions, reducing risk in any digital expansion. Kount recommends businesses: Apply artificial intelligence & machine learning (ML) to increase approval rates for good orders and reduce false positives. Deploy a new fraud prevention platform or extend your existing solution to prepare for unique fraud tactics and risks that appear when entering new channels such as BOPIS, new industry verticals, and new geographies. Add the ability to identify friendly fraud in real time. The Five Risks of eCommerce This Holiday Season Protecting new and emerging digital channels is an important factor this holiday season, and the second risk in our Holiday Risks and Opportunities Series. Just like St. Nick, eCommerce companies need to make their list and check it twice. [button link="https://kount.com/holiday"]Download Checklist[/button]
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