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The Naughty List Can’t Stop Fraudsters: Keeping Your Ecommerce Site Safe During the Holidays

By: Tim Laudenbach
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Most ecommerce sites experience an increase in traffic during the holiday shopping season, but not all visits are welcomed. With heightened online shopping activity, the holidays are a prime opportunity for bad actors looking to steal payment credentials or  commit other forms of fraud. Last year  the number of malicious shopping-related websites increased 178% ahead of the 2021 holiday shopping season, according to Check Point Research.

The techniques used to commit fraud have become increasingly complex in recent years. Ecommerce brands need to take proactive steps to safeguard both their sites and their customers without negatively impacting the customer experience.

Take a look below at the potential threats ecommerce brands may face this holiday season, along with effective strategies to protect your business (and customers) against fraud during the 2022 peak shopping season.

More sophisticated fraud attempts

Today’s hackers and fraudsters are more sophisticated than they’ve ever been, using a range of techniques to access or steal private information. In a recent Commerce Connect podcast episode, Accertify president Mark Michelon pointed out that credit card theft is no longer a primary goal for online thieves. Instead, they are targeting account takeover, where stolen user credentials could unlock multiple accounts. This kind of fraud is more difficult to track than traditional types of online scams like phishing emails,  particularly for older shoppers who may not be as aware of online shopping best practices.

Ecommerce organizations also need to be on the lookout for “friendly fraud,” or returns abuse where customers deceitfully claim they never received purchased items. Customers dissatisfied with products are also increasingly likely to file chargebacks instead of contacting merchants or returning items. These types of fraud can have a significant impact on a brand’s bottom line, outweighing the cost of simple returns and making it important for ecommerce brands to craft clear policies and plans for managing these situations.

Friction-free shopping during the holidays

Ecommerce brands have the power to stop nearly all fraud with the right cybersecurity protections and strategies in place. But in doing so, leaders could be turning away legitimate sales or making the purchase process overly complex. For example, many customers value a one-click checkout experience, but this can come with additional risks. Ecommerce brands need to weigh the value of frictionless shopping with the value of preventing fraud and protecting customers.

Preventing fraud is essentially a calculation of how much friction you want to introduce into the process with how much risk you are willing to accept. The goal should be to find a solution that impacts the least amount of legitimate orders while preventing the maximum amount of fraud.

Safeguarding your ecommerce site

Digital River and leading fraud services provider Accertify recommend ecommerce brands take the following actions to mitigate fraud this holiday shopping season:

  • Know your customer – Utilize site data and machine learning to know how a customer typically behaves on the site. Where are they coming from? Is the customer browsing before buying? Are they pasting or typing copy? Deviations from normal behavior can be a red flag for fraud.
  • Have a solution that can pivot quickly – Ecommerce brands don’t have weeks to write new code to respond to an attack. When incidents occur, brands need to act immediately. Every organization should have an emergency incident response plan in place and utilize IT systems that can quickly pivot to adapt for new threats and security measures.
  • Use the power of machine learning and automation – Advanced technology allows brand leaders to quickly look at site data to find abnormalities and detect potential fraud. Humans need to guide machine learning to understand typical customer behavior for a given site. Increased automation in addition to proactive monitoring is the best combination for stopping fraud.
  • Test for increased traffic – In the run up to the holiday shopping season, IT teams should test all owned ecommerce destinations to ensure they can handle an increase in traffic. Sites crashing due to too much traffic could have catastrophic financial implications if they occur during peak shopping periods. IT professionals can use data from previous years to anticipate traffic levels and plan for temporary increases.
  • Implement a code freeze – All website testing and code changes should be completed well before the peak of holiday shopping. From that point forward, IT professionals should implement a code freeze on the site so that no further changes can be made. This will help ensure changes were made appropriately and there are no surprises when increased site traffic begins.
  • Have a rock-solid returns policy – To mitigate incidents of “friendly fraud” or inadvertent chargebacks, brands should craft a well-articulated returns policy to constitute a legitimate return. Brands should communicate to customers on how charges will appear on bank statements so customers don’t file erroneous chargebacks because they don’t recognize a purchase or merchant of record.

Stay vigilant, stay profitable

The holiday season is one of the year’s busiest times for online shopping, which means it’s also among the biggest opportunities for fraudsters looking to steal sensitive information. Protecting users and company assets is paramount for ecommerce brands. By taking the steps outlined above and working with a fraud prevention partner that specializes in stopping today’s sophisticated cyberattacks, brands can feel confident in having a successful and fraud-free holiday shopping season.

Want to boost fraud prevention across your digital properties? Connect with Digital River to learn how our industry-leading fraud prevention services can keep your site secure throughout the holiday rush and beyond.