Ask the Expert: Peak Season Fraud Prevention Advice

As ClearSale’s Head of Data Analytics, Bruno Farinelli frequently receives questions about managing fraud risks during peak shopping seasons. This holiday season has been no exception, especially during a time when merchants are eager to seize on every possible sale. We’ve pulled together some of Bruno’s best wisdom for merchants about peak season fraud prevention to help you prepare.

ClearSale: In a recent MyTotalRetail.com article, you talked about the fraud risks for merchants during this peak season. Your team is also gearing up to spot fraud before it impacts our clients’ bottom line. Given that ClearSale’s AI-enabled algorithm approves 90% of valid orders and flags suspicious orders for further review, what does your team of fraud analysts look for to approve more suspicious orders?

Bruno: The analyst’s mindset should always be toward finding potential fraud. However, during a peak season, one strategy that proves very valuable is adapting this same mindset when it comes to approving suspicious orders. 

The goal is to find possible explanations for every suspicion raised, considering that it’s peak season. These days, it's common to have higher recurrences and expenses; it's common to send gifts to friends or family who live in different states – behaviors that would otherwise be fraudulent. 

However these circumstances can be easily investigated by a seasoned fraud analyst who can distinguish criminal behavior from a holiday buyer.

Get more insights about the types of fraud to expect this holiday season.

ClearSale: Data breaches are also a concern during peak shopping seasons. What do companies need to understand about data breaches, and how does that impact their customers and business?

Bruno: Understanding what data was compromised and taking the next steps in terms of compliance is extremely important. Aside from legal risks involving the customers that had their PII (personally identifiable information) data breached, companies should also be aware that it's extremely likely a criminal will try to use those same data points in fraudulent transactions. Using stolen, valid data increases the likelihood that a transaction will be approved. 

Whenever passwords are leaked, it's also probable that fraudsters are going to use that account to commit fraud. The first thing merchants should do is ask their customers to change their passwords. This will, ideally, prevent account takeovers (ATOs) and subsequent fraud.

In fact, merchants should have processes already in place to make sure any leaked passwords are reset once a breach is confirmed. And they need to employ much more diligent monitoring techniques when it comes to any transactions using data points involved in the leak.

Learn more about ATO fraud with our newly updated guide:

ClearSale: In a PAYMNTS article about AI entitled, “Not Everyone Thinks AI Is Going To Destroy Us,” you point out the advantage of using modern AI LLMs (large language models) for pattern matching in fraud prevention. What are the benefits of ClearSale's AI technology when it comes to fraud detection?

Bruno: When it comes to AI technology, our technology is superior to most solutions on the market.  Primarily, this is due to two benefits we offer. 

1. Our AI algorithm and variables are built by AI experts who are seasoned fraud analysts – our team has been fighting online fraud since the first ecommerce transaction was made. Our people know all of the fraud trends, the specificities of different schemes across regions, countries, industries and more. 
2. Not only do we have one of the largest fraud databases in the world, but also the quality of our data is superior. Our analysts approve and decline orders with an extremely high degree of certainty. And the insights they gather through their analysis of suspicious orders is fed back into the system. This assures that our AI algorithm is learning from the best possible information. 

ClearSale: Historically, we have had a 99% retention rate. How do you think ClearSale's expertise and AI technology contribute to that high number?

Bruno: A lot of factors contribute to our retention rate. We are a culture-centric company, and that approach transfers to how we work with our clients. Their success is our success, and our team strives to deliver results that help ensure a safe and secure shopping experience for their customers.

I also think that it’s the combination of AI technology, experience and the fact that we don’t auto-decline orders – which turns off loyal customers. In case study after case study, our clients increase their approval rates, they significantly lower chargebacks, and they are able to confidently process sales – increasing revenue. Clients want high approval rates as fast as possible, and our approach delivers that.

Find out why leading companies trust ClearSale:

For more expert advice or to find out how ClearSale can help your company fight online fraud, contact us today.