8 Tips to Help Your Fraud Team Manage Seasonal Needs

Ask ten retailers what their busiest season is, and you’re likely to get nearly as many answers: Mother’s Day. Valentine’s Day. Black Friday. Back-to-school shopping. Regardless of when you see spikes in your sales volume, one thing is certain: Seasonal spikes impact your e-commerce fraud risk.

Even during “regular” sales periods, busy fraud teams are challenged to correctly identify every fraudulent transaction and prevent every false decline. Add more transactions onto their already full workload, and that means even less time to review orders. It also sometimes means relying on seasonal help fraud teams meet the demand, even though these temporary workers may not have the expertise that ensures they’re able to accurately spot subtle fraud indicators.

On the other hand, merchants who plan ahead for these seasonal spikes may fare better. Here are eight ways to prepare for your next peak selling season to ensure you can offer an excellent customer experience even during your busiest moments – without increasing your fraud losses.

Expect the Best, but Prepare for the Worst

Chances are that past peak seasons have not always gone well for you. Dig into your old data and document the fraud issues you’ve had in the past. Ask yourself:

  • How could you have handled these issues better?
  • Do you have a communication plan in place in the event of a fraud attack?
  • How will you allocate resources when the manual review queue becomes unmanageable?

Take the time now to put standard operating procedures in place before your sales volume and fraud risk skyrockets, so you’ll be in a better position to prevent a repeat performance this year.

Optimize Your Manual Review Process

It’s common to see unusual shopping patterns during peak seasons. During the holidays, for example, many customers will ship gifts to addresses other than their billing address. You may also see a high volume of repeat purchases and larger-than-expected purchases from first-time customers.

As a result, there’s a risk your fraud prevention team will decline these good orders that only appear to be suspicious. Prevent this by identifying two or three indicators of legitimate customers, and add these indicators to your manual review process. This gives your fraud team objective criteria they can use to automatically approve transactions when they see these indicators.

Also, define a maximum amount of time fraud personnel should spend on reviewing orders. Spending too much time reviewing orders often leads to second-guessing an initial fraud decision.

Understand Your Seasonal Fraud Patterns

Don’t let increased sales volume and changing customer shopping patterns distract you from identifying fraud trends and patterns. Have someone on your team analyze sales and fraud patterns to identify the broader trends at play. For example:

  • Are most of your fraud cases coming from a particular state or country?
  • Is there a specific product being targeted by cybercriminals?
  • Are you experiencing increased fraud during the Christmas holidays? Back-to-school season? Valentine’s Day?

Once you see the patterns, it becomes easier to protect yourself from false declines, chargebacks and overall fraud.

But don’t get complacent. What may have been the trend last year may not be so this year. Be prepared to learn and adapt, using past experience to refine your fraud prevention methods.

Review Your Fraud Prevention Approach

Your fraud prevention team is responsible as much for increasing sales as it is for preventing fraud. While your initial reaction during the holidays and other peak sales periods may be to make fraud prevention rules more stringent, carefully and thoughtfully relaxing your fraud rules may in fact be a smart strategy.

Depending on how stringent your fraud rules are to begin with, relaxing the rules during peak seasons might actually increase revenue enough to offset any increase in fraud losses.

Watch for Increased Friendly Fraud

During the holidays, family members often share credit cards to purchase gifts. However, this means the cardholder may not know about some transactions until the statement arrives. If the cardholder sees a charge he doesn’t recognize, he may file a chargeback.

E-commerce merchants can reduce this friendly fraud risk by using clear billing descriptors on statements and responding quickly and completely to any customer inquiries.

Listen to Your Customer Service Team

Your customer team probably hears it all when fielding phone calls from customers. However, your fraud prevention team might benefit from this insider information. For example, if fraud is on the rise, calls to customer service probably are, too.

Check in with the customer service team frequently to see what the top customer complaints are about and use that information to help identify emerging fraud patterns.

Identify Returning Customers

Loyal customers can be a merchant’s best friend. Not only do they provide steady revenue, but they have a significantly reduced fraud risk when compared with new customers. It’s a smart move, therefore, to identify returning customers and automatically approve those orders.

Sounds simple, right? In practice, though, you’ll need to make sure your customer database is squeaky clean. Customers who move, get a new computer with a new IP address, or get married and change their last name can create problems if your CRM system is too simple. A better way is to use a system that recognizes customers based on linked IP addresses, biometrics, and email and physical addresses.

Prepare for Post-Event Chargebacks

Always keep detailed transaction and communication records, including shipping confirmations, download data, and email and chat correspondence. These records will help you provide the right information if a customer asks about a past transaction, which can help prevent disputes from escalating into chargebacks.

Whenever your busy time of year is, one thing is certain: You want to approve every legitimate sale yet also minimize your fraud exposure. But when sales are hopping, the last thing on your mind is hiring, training and managing your fraud prevention team. An outsourced fraud management solution may be a better answer.

Before the upcoming holiday rush, take the time to download our free “Fraud Protection Buyers’ Guide” ebook. It will walk you through your available options and help you choose the solution that’s right for you and your business, so you’ll be prepared for every busy season that lies ahead.