Safeguarding Your E-Commerce Store: Unmasking Holiday Season Fraud
The holiday season paints a vibrant picture in the world of e-commerce, where surging sales, flashy deals, and exciting offers come into the picture. This festive period isn't just about celebration; it's a revenue powerhouse for online commerce. However, the festive season presence emerges: the rise in E-commerce holiday season fraud attempts. Unfortunately, this dynamic also comes with fraudsters seeking to exploit the season's sale for personal gain. By finding loopholes in the high-volume transaction game, these bad actors aim to gain financial rewards from both customers and merchants. In this blog we will cover E-commerce holiday season fraud, identify its impact on e-commerce, and explore strategies merchants can employ to fight against the fraudsters.
Impact on Merchants
The repercussions of holiday season fraud can impact the eCommerce merchant profitability. The deceptive practices employed by fraudsters lead to compromised customer trust and hampers customer loyalty. With the bad experiences, customers will move to competitors resulting in revenue losses and will impact overall customer lifetime value (CLTV). These losses, coupled with operational disruptions and reputation damage, can have a significant at the very essence of the holiday season.
Various fraud tactics come into play during the holiday rush. Here are some of the fraud attacks majorly committed by the fraudsters:
- Account Takeover (ATOs): Account takeover involves cybercriminals illicitly accessing users' accounts. From October, there's a rise in bot-driven attempts, a prelude to the actual fraud season. Fraudsters gather credentials for extensive use during the holidays, with a subsequent surge in human-led attempts. Compromised accounts grant easy access to personal info, credentials, payments, and loyalty points.
- Promo and Referral Abuse: In the holiday season, e-commerce platforms roll out different referral promos and discount coupons to enhance traction and emphasize up-selling and re-selling efforts. However, exploiters use fake accounts to exploit these promo codes. This adversely affects customer acquisition costs and hamper the merchant’s aim of reaching right target audience.
- Return Fraud: During the holiday season, a consistent pattern emerges: a notable increase in returned orders. The lenient return policy extended by e-commerce merchants presents customers with a potential misuse. Merchants, faced with a dilemma, grapple with preserving loyal customers' experience while preventing abuse. With the evolution towards omni-channels, offering buy, pickup, and return flexibility anywhere, fraud review becomes complex. Among the array of return frauds, instances encompass temporary use, counterfeit returns and returning damaged items.
- Reseller Abuse: Fraudsters act as resellers, exploiting the season's high demand to resell items purchased at a discount, undercutting merchants' profits.
- E-Gift Card Fraud: During the holiday season, customers often opt for the versatile choice of presenting loved ones with gift cards. This becomes a convenient target for fraudsters due to its anonymity and the absence of shipping address requirements.
The fraud prevention strategy for holiday season starts 3-4 months prior to the season. It is very important for eCommerce platform to improve its fraud strategy without impacting the customer friction. It is very important for eCommerce merchants to predict the behavior of holiday season and plan the order volume. Many a times merchants are not able to predict the customer response which result into use of inefficient use of fraud detection tools.
How to prepare for holiday season fraud
Kount offers end-to-end fraud prevention solution to anticipate new fraud patterns. Kount’s patented ML model help eCommerce merchants in detecting and preventing new fraud patterns. Here is the way in which Kount can help in detecting the emerging frauds in Holiday season.
Enhancing Fraud Detection with Seasonal Behavior Analysis
In the technical realm, improving fraud detection involves focusing on fraud logic aligned with seasonal behaviors. Kount’s eCommerce Fraud Prevention solution adapts changing customer behavior during holidays by updating rules, ML models, and risk scoring. Continuous fraud logic monitoring reduces false positives effectively.
Cross-Domain Collaboration: A Neglected Yet Vital Step
Many eCommerce platforms overlook the importance of working across domains. Reaching out to designated stakeholders and aligning strategies and goals is crucial. Kount experts helps in designing the fraud strategies collaboratively for the eCommerce merchants.
Anticipate Chargeback Surge
A common trend post-holiday season is a rise in chargeback rates, typically seen from the months of January to March. Merchants should proactively establish cancellation and return policies ahead of time to effectively combat chargebacks. Kount’s chargeback management solution provides a comprehensive set of features to prevent and address chargebacks, all within a unified platform. It includes elements such as order validation, prevention alerts, and acquirer refunds to effectively mitigate the risk of chargebacks.
Comprehensive Fraud Defense Approach: Aiming for a 360-Degree Perspective
With eCommerce embracing multi-channel expansion, attaining a holistic understanding of individual customers is important. This entails leveraging fraud prevention tools such as real-time monitoring, rule engines, machine learning models, behavior analytics, and authentication. Kount provides fraud detection software that employs a machine learning model combining supervised and unsupervised learning techniques to effectively identify a wide range of fraud patterns. Leveraging a combination of data networks, advanced AI algorithms, and a scalable platform, Kount makes informed decisions to combat digital payment frauds, ATO incidents, new account frauds, bot attacks, friendly frauds, and disputes.
Leverage Insights from Setbacks
Losses provide invaluable insights into system vulnerabilities. Kount eCommerce Fraud Prevention solution constructs customer profiles for bad actors and training the models with those data sets helps in finding fraud pattern more conveniently.
eCommerce Fraud Prevention platform is the answer for fight against season fraud. It is very important for eCommerce merchants to select the fraud prevention platform that knows their business. Every business has different type of fraud pattern and buzz around the holiday season. According to Analyst Shivam Natani, “Kount eCommerce Fraud Prevention solution provides a perfect tailor-made solution based on their business needs. Through aligning fraud detection with seasonal patterns, fostering cross-domain collaboration, and proactively addressing potential chargeback spikes, e-commerce can safeguard a trustworthy shopping journey.”