Adjusting Your Fraud Prevention Strategy for the Holidays

Adjusting Your Fraud Prevention Strategy for the Holidays

November 15, 2018

[Editor's note: November is Holiday Survival Month at Card Not Present (sponsored by Sift Science). The holidays are the best of times for most merchants, but they can result in sleepless nights for fraud professionals charged with protecting the bottom line amid a crush of orders. Check back here throughout the month for updated content that will help merchants make their customers' holidays memorable while holding fraudsters at bay and keeping their staffs sane.]

Higher ticket averages, new shipping addresses, faster shipping...consumers’ buying habits change drastically during the holidays, and you’ll need to tune up your fraud prevention approach to keep up. If you don’t, you risk missing new patterns of fraud, as well as rejecting—and angering—legitimate customers.

Here are some things to think about when adjusting your strategy:

Scaling to adjust for purchase volume. Are your rules scalable to the purchase volume you’re expecting? If you usually flag five percent of orders for manual review, can your team handle that amount as purchase volume increases? While many retailers see huge growth in daily orders (sometimes even 100-percent growth) and double the volume of reviews, you can’t double your staff.

Optimize for customer experience versus fraud. Fraud prevention platforms tend to be conservative in letting transactions through—more orders are declined and transactions are highly scrutinized to keep chargebacks low.

But during the holidays, it’s in a retailer’s best interest to selectively let in more orders: less friction for shoppers, maximum profits for your business. Communicate these decisions to your stakeholders, so everyone is on the same page.

Socialize changes to your manual review team. Review teams are often so entrenched in their work that they aren’t aware of strategic changes until it’s too late. Orders are streaming in and the team is assuming they should be reviewing them according to standard procedure. The result? Friction for holiday shoppers whose orders are being flagged as suspicious.

Keep everyone involved in the review process informed so they know what changes are happening during the holidays, for how long and how review approaches should be adjusted. It’s helpful to provide teams with one-pager cheat sheets for reference.

Establish an escalation plan. In Q4, teams often pay more attention to customer complaints, which can point to fraud issues. Create an escalation process to address these issues that includes turnaround time. Everything is about speed during the holidays—the time it takes your team to react can have a major impact on your bottom line.

Share any large sales or targeted marketing efforts with your team. Make everyone aware of huge sales or targeted marketing campaigns. Nothing screams “fraud” like a sudden influx of orders of one particular product or concentrated in one region. Avoid causing your team stress—let them know ahead of time that they should expect to see these types of orders coming in, when they should be seeing them and for how long.

Set up a rollback plan. Sadly (or happily, depending on who you ask), the holidays don’t last forever. Start planning now for when your fraud prevention approach will go back to normal. This generally happens when your business stops offering free shipping, or after the last day to make purchases for guaranteed Christmas delivery. You don’t want to miss a beat during the shift from holiday mode to standard procedure—being unprepared could result in fraudulent transactions slipping through.


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