How to Prepare for a High-Risk Ecommerce Fraud Holiday Season

Holiday season is always the biggest gift for fraudsters and unfortunately, ecommerce fraud during the holidays is growing year over year. Between 2015 and 2016, ecommerce fraud increased by33%, according to Experian.

This year, ecommerce fraud will be an even bigger problem thanks to a new round of consumer data breaches, including the huge Equifax breach that exposed protected data on more than 145 million Americans.

Not only is the ecommerce fraud holiday season dangerous for the customer, but for the retailer as well.

When a customer conducts a fraudulent transaction,a retailer loses the merchandise, as well as the cost to prepare and ship that merchandise. As fraud becomes more prevalent, online merchants are tasked with trying to keep up with the latest techniques, forcing them to constantly pour money into fraud detection and prevention.

To make the ecommerce fraud holiday season season safer, there are steps you can take now to review and reinforce your ecommerce fraud prevention practices.

Friendly fraud tends to peak during the first quarter of the holiday season.

With friendly fraud, a customer receives an item and disputes it, getting a full refund while also being able to keep the item. Retailers typically see three main disputes associated with one-time sales or holiday shopping. These include instances of friendly fraud, merchant error or processing errors and criminal fraud.

In many cases, cardholders seek to game the system, experience buyers’ remorse or simply experience billing confusion, resulting in chargebacks and escalating fees for everyone involved. This is causing many merchants and businesses to look into simplified solutions to address issues of fraud and errors. Training your customer service team is the key to fighting friendly fraud.

Beware of Account Takeover.

Account Takeover fraud, in which criminals hack into existing customer accounts within a merchant to make their own purchases, was already on the rise before thieves gained access to Equifax data. Now, fraudsters have much more data they can use to identify vulnerable accounts, access them, change the email address and password, and go shopping using the customer’s account.

Leveraging the legitimate customers good-standing with the merchant, and in some cases even being able to use existing payment information associated with the account, can lead to major chargeback losses for merchants as well as damaged relationships with customers.

Keep an eye on phishing emails and report them as soon as possible.

With more customers shopping online during the holidays and more customer service emails hitting an employee’s website, cyber-criminals are aware of how hectic inboxes may get and attempt to take full advantage. If one employee falls for a holiday email spam attack, it may not only be their own bank account that gets emptied, but business credentials as well. Phishing campaigns are devised to get employees to reveal critical business data or login credentials.

How does Precognitive help?

Precognitive’s approach to passive multi-factor authentication insulates your users and your business from common Account Takeover fraud approaches. Our Adaptive-ID technology allows for visibility beyond “Does the user credentials match?” Adaptive-ID is able to make device determinations to know whether a customer is using a device they’ve transacted with previously.

Our behavioral analytics engine, Precog-BA, drills down to new levels focusing on biometrics like keystroke cadence to see if the user is entering their credentials with the speed and patterning of the same way the user has in the past.

This combination allows Precognitive to differentiate and detect a fraudster using a new device with someone’s stolen credentials, as well as a legitimate customer using a friend’s device with their typical login pattern.

Learn more on how a real-time fraud detection solution such as Precognitive can add value to your ecommerce business.

Preparing your online store for the holidays requires diligence and quite a bit of work. The reward for implementing a reliable fraud solution kneading out fraudsters include more holiday sales, less holiday fraud, stronger customer relationships, and continued sales throughout the year.