This year’s holiday sales are estimated to surpass $1 trillion, which is pretty exciting news for retailers. Unfortunately, though, the holiday season has historically proven to be fraudsters’ favorite time of year, and this year in particular brings with it additional security threats. Read up to learn how you can ensure a successful holiday season with as little fraud as possible.
Why Is There More Fraud During Holiday Season?
Fraud during the holiday season is not a new occurrence- during the 2016 holiday season, fraud increased by 31%. With everyone in a spending state of mind, fraudsters are quick to hop onto holiday sales as well, and they likely feel that they can get away with more, as their extravagant purchases won’t raise much suspicion considering everyone else is doing the same.
In more recent years, another reason that holiday fraud has been going up is due to the proliferation of online fraud. As we’ve mentioned on our blog before, the introduction of EMV chip cards drove fraudsters online because they can exploit the inherent weaknesses of card-not-present purchases . Especially with Black Friday and Cyber Monday pulling in so many online sales, merchants need to consider their online cyber security when such a significant portion of their sales will be made online. Mobile shopping also poses unique security threats, and it is predicted that 60% of Black Friday sales this year will be made on mobile devices.
A new threat for the 2017 holiday season comes from the Equifax breach. The Equifax breach released the data of 143 million Americans, including data that is needed for fraudsters to break into online shopping accounts and make purchases, which is known as account takeover fraud. Account takeover fraud has grown by 45% in the past few months alone following the Equifax hack. Undoubtedly, account takeover fraud will make up a significant portion of fraud this holiday season.
Here’s What You Can Do
You’re already on your way to preventing holiday fraud by simply being aware! Now you can take steps to prevent fraudulent purchases from taking place. See below for our tips on curtailing both in-store and online fraud.
Be wary of suspicious transactions, such as those with inconsistent or incorrect information, or multiple orders from the same person to different addresses. To maximize your security, we recommend that you use a fraud protection software like FraudWatch in addition to manually monitoring- especially considering you’ll have an increased sales volume during the holidays.
Request personal information
You can prevent identity theft fraud by asking for as much information as possible at checkout. Request personal information like billing and shipping addresses, as well as the card security code.
Secure the login process
Require users to create difficult passwords, and set a limit on the number of attempted logins before the account will be locked.
If you aren’t yet EMV compliant, it’s time
One of the best things you can do to deter fraud is become EMV compliant. Identity fraud is much more difficult with chip cards, which are harder to replicate. As long as you are EMV compliant, you won’t be responsible for fees on a fraudulent transaction that goes through.
Ask for identification
If someone is paying with a credit card, you can always ask for additional identification. However, should the customer not show ID, the merchant is generally not allowed to decline the purchase.
Make a Code 10 Authorization Request
If you suspect that the transaction is fraudulent, you can call the card issuer’s authorization center and tell the operator that you would like to make a code 10 authorization request. The operator will then provide you with a proper course of action. Remember to remain calm throughout this process, so as not to alarm the customer.
Prepare your employees for the holiday season by providing mandatory training sessions on loss prevention. Employees should know what steps they can take to both prevent and identify fraud.
Whether you sell online or in-store, closely observing holiday shopping and fraud trends will also bring you an added layer of security.
Here’s to a successful and profitable holiday season! For more information on Fidelity’s payment processing and fraud protection solutions, we encourage you to reach out to us.