Skip to content
Fighting Holiday Fraud

Fighting Holiday Fraud

  • Mike Jagusiak

With the holiday season around the corner, fraudsters worldwide are gearing up for the opportunity to take advantage of both merchants and consumers. With fraud up 13 percent over the holiday season, merchants must be on high alert as the holidays hit full stride.(1) But what exactly should they be looking out for and how can they be best prepared to protect the data of their customers over the busiest time of the year?

Detecting Fraudulent Activity During the Busy Holiday Season

For fraudsters, it’s all about finding lapses in protection and slipping in and out of transactions without being detected. For example, a bank robber can pull one heist for one million dollars or commit one million robberies for one dollar each. Same result, but which one has a higher risk of detection? Fraudsters know there is heightened security over the holiday season, so more experienced cybercriminals will subtly build their approach around non-peak transaction times to avoid detection. Just because we expect they will attack does not mean they necessarily will, but merchants must be prepared for anything.

Novice fraudsters will likely go along with the Cyber Monday traffic, whereas more mature fraudsters are thinking a few steps ahead. Cyber Monday online sales broke U.S. records last year at $7.9 billion, showing the importance of being able to spot suspicious activity among the high volume of transactions.(2) Fraud is also changing, so merchants must constantly be adapting to keep pace with the attacks they’re trying to prevent.

Proactively Fighting Fraud

Teams must keep merchants informed about where their vulnerabilities lie. There must be clear lines of communication to identify issues within the call center or the eCommerce function. Merchants need to be able to take action on a small trend of activity early on, as it may develop into a larger issue down the road.

Looking at the lifecycle of a chargeback can also lend several insights. We can see where a transaction came from and when it occurred. It often takes banks 35-45 days to relay this information, giving fraudsters a significant head start. We use tactics to shorten this window to two to four days to close these gaps of protection in real-time. Merchants need to cover their blind spots quickly versus trying to backtrack when fraudsters are likely untraceable.

Bridging the Gap Between Customer Experience and the Bottom Line

Another aspect to consider is the impact of fraud on other parts of a merchant’s business. They must gauge if it’s worth the energy, resources and backlash of solving a fraud case compared to the ROI of those actions. It’s also key to have the intentions of various departments in mind. The customer service department will not have as much stake in the amount of a loss, but rather on ensuring a seamless CX and keeping customers happy and secure.

On the other hand, the finance department is focused on the monetary aspect of fraud and less on the effect on each consumer. With the impacts of online fraud expected to exceed $31 billion for banks alone, this is a concerning position.(3) Yet, merchants need to be realists in their fraud prevention strategies. You can create a plan to prevent fraud and keep consumers’ transactions as secure as possible. However, you should find a balance in the tactics you employ. Merchants must walk the tightrope of ensuring safe transactions, but not setting the filter so narrow that it catches normal shoppers and impacts the desired CX.

How Merchants Can Mitigate Fraud Over the Holiday Season

Fraud is very sophisticated and has changed significantly over the last 18 months. Fraudsters are patient and waiting for the ideal time to strike. They are often intimately familiar with the system and tools used to stop them. As technology advances, so does fraud, thus merchants must be able to adapt. Even ten years ago it was much easier to detect fraudulent activity, whereas now it can feel like finding a needle in a stack of needles. Merchants need to increase sales without impacting the CX. With the looming threat of fraud, this can feel like a tall order.

Many merchants think they can take on the fight alone, but with very few professionals capable of providing the necessary level of support it can be a daunting task. The bigger merchants get, the more on the radar for fraudsters they become. You can’t eliminate all risk, but you can identify vulnerabilities and take steps to mitigate them, leaving no stone unturned. Merchants need to prep for the next year’s Black Friday immediately after this year’s Cyber Monday ends. It’s a constant battle, however being proactive can prepare your business and keep your customers safe during the busiest time of the year.


Mike Jagusiak

Director of Client Financial Services at PFS

Back To Top