IN THE SPOTLIGHT
Marketing Should Play a Key Role in Stopping Fraud This Holiday Season
Well, the holidays are here again. And, based on the initial numbers from the extended Thanksgiving/Black Friday/Cyber Monday event, the next few weeks look promising.
US consumers spent $26.6 billion online during the six days between Thanksgiving Eve and Cyber Monday. That’s a 24% increase compared to the previous year! In addition, more sales than ever before came in through mobile channels. On Thanksgiving, mobile sales actually overtook desktop for the first time ever, representing 54% of eCommerce purchases.
Don’t get too excited, though; even as eCommerce develops and matures, credit and debit cards retain a central role in the process. So, too, does card-not-present fraud. Without carefully-considered action, the prospect of fraud could both undo all your hard work in attracting buyers. Fraud can also make your marketing efforts less-effective going forward by generating false data and making it hard to identify trends.
More Traffic Means More Risk
You may see the uptick in traffic as a gift, but unfortunately, so do fraudsters. Increased sales mean increased risk, and that makes the holiday shopping season a prime-time for fraud and other threats facing your brand.
The 2018 holiday season overall will see a 14% increase in fraud activity compared to the year’s average. Although fraud is projected to have peaked on Thanksgiving, criminals will continue to take advantage of the holidays both before and after.
Your business’s ability to detect fraud is stretched thinner as traffic and sales volume increases. Criminals know that, and see it as an opportunity. This problem goes far beyond swiping packages off a customer’s porch. A fraudster can attack via multiple different angles:
- Impersonating a cardholder using stolen payment information
- Impersonating a customer using stolen account information
- Abusing performance marketing channels to score unearned commissions
- Stealing customer data stored within your systems
- Trying to liquefy stolen data by committing gift card fraud
Criminal fraud isn’t the only concern. Seemingly-legitimate customers could make a purchase with the intent of filing a chargeback later (a practice called “cyber shoplifting”). There’s also the prospect of buyer’s remorse; as much as $132 billion in purchases made in the last year could be at risk of friendly fraud due to buyer’s remorse.
The Marketing department plays an essential role in preventing buyer’s remorse. You are the ones who set customer expectations, which is why you need to be careful of what you can promise customers. Of course, that’s not going to address most of your loss exposure, which is where careful data analysis and interdepartmental cooperation come into play.
Metrics are the Greatest Gift
The key to protecting the business against fraud, like everything in marketing, is in the metrics.
You’re certain to see an increase in your overall transactions in the run-up to the holidays and into the new year. With that in mind, be sure to watch customers’ purchasing activity closely, keeping an eye out for red flags that could suggest fraud. Examples include the buyer’s inability to provide personal information, repeated inquiries on the same topic, and large or unusual orders from new buyers.
None of these indicate fraud on their own. However, when multiple transactions start to trip the same alarms, it suggests you could have a problem.
Machine learning is obviously going to play a role. Lots of companies are already employing this and other predictive analytic tools to try and identify and prevent fraud. You’ll need access to as many data points as possible to make this a reality, including off-season metrics, data from previous holiday seasons, and sales projections for the current year. That said, you should still expect the unexpected.
Coordinate Efforts with Other Departments
Communication is key. No department is atomized in a modern, data-powered organization. To minimize fraud and see the best returns on your marketing efforts, you must work with other departments. If you’re not closely-coordinating with every other part of the company, you could be leaving invaluable data unrecognized.
Be sure every other department is aware ahead of time when promotions start. This will allow them plan for changes in traffic, so they’re not caught off-guard without the manpower to manage so many transactions.
Also, with a coordinated effort, each department can adjust fraud detection practices based on customer patterns. Your fraud prevention team can then target suspicious transactions without causing a surge in false positives. After all, you don’t want to let a criminal slip through your organization’s defenses while legitimate customers are flagged as fraudsters.
Be Ready for the Post-Season
Even after the new year, your job is far from done. Remember those chargebacks we mentioned earlier?
Chargebacks exist on a 45- to 60-day cycle. You can take steps to mitigate risk before the transaction, but some chargebacks will inevitably get through. Thus, when you see a surge in sales in November and December, be prepared for an uptick in disputes in January and February.
Remember: many customers use chargebacks to commit friendly fraud due to buyer’s remorse, or simply as a matter of convenience. Marketing can play a direct role in preventing those disputes.
One recommendation I often make from a marketing angle is to try and discourage post-holiday chargebacks by advertising a no-questions-asked return policy. This will make customers more likely to use the proper channels to conduct a return. Also, consider offering customers a 10-20% bonus if they take store credit for a return. Not only will this further reduce wasteful chargebacks, you can also convert your returns in to new buyers.
Tackling fraud and chargebacks doesn’t seem like something the Marketing department would have much of a hand in. However, every facet of a business has a part to play. Working alongside other departments, Marketing can work miracles to protect your business against fraud.
Monica Eaton-Cardone, Co-Founder and COO, Chargebacks911, is an international entrepreneur, speaker, author, and industry thought leader. She has extensive experience developing agile technologies and products, optimizing ecommerce profitability, analyzing risk relativity, and creating payment processing solutions. Eaton-Cardone was instrumental in co-founding a number of successful companies, including Chargebacks911, eConsumerServices, and Global Risk Technologies.