Holiday Fraud Prevention: Seven tips from the pros
Is anyone ever really ready for the holidays? It’s hard enough to keep up as a shopper, but if you also work in e-commerce fraud prevention, you know you’re guaranteed a crazy ride.
To help retailers navigate the seasonal rush, we crowdsourced some expert strategies from fraud and risk experts who’ve already logged a few seasons in the holiday trenches. Here are their suggestions:
1. Plan for adverse scenarios. Start the holidays with well-prepared SOPs (Standard Operating Procedures) for anything you think could go wrong. Think of things like communication procedures for a fraud attack, handling for staffing or quick decisioning when the manual review queue grows high, and steps to take for internal or external system downtime.
With prepared documentation and agreement from leadership on how to handle fraud risk tolerance in various adverse scenarios, you can focus on fixing issues if they arise instead of figuring out how to fix them.
– Caleb Callahan, director of payments and fraud at Jet.com
2. Adapt fraud logic to seasonal buyer behavior. Anticipate that your customers’ purchasing behaviors may change during the holidays, and update your fraud logic (both your models or rules) accordingly. Depending on your business model, be aware that your average transaction value may increase as well as the count of transactions.
Adjusting your fraud logic will help keep false positives low. You don’t want to find a legitimate user whose order seems to be higher than usual and wrongfully attribute it to fraud!
– Tal Yeshanov, risk and expert, Uber
3. Optimize manual review to enable good buyers. Holidays = abnormal shopping patterns, which can make discerning fraud vs. gift shopping very hard. Since the holiday shopping behavior is abnormal, it can greatly increase the chance that your team will be rejecting good orders incorrectly.
To help mitigate this, find a core two to three indicators of good buyers, then make that fundamental to the manual review process. When your team sees these indicators, accept the order without further analysis. Further analysis will confuse the auditor and increase the chance of making the incorrect decision (most people are risk averse and don’t want to process a potentially bad order). Also, create firm caps as to how long a team should review orders for.
– Courtney Bode, marketplace operations manager at digital mall Wanelo
4. Consider relaxing your fraud prevention. When you are in a good place with your fraud and chargeback levels, you should consider relaxing your protection slightly, to enable more revenue while taking into account a small increase in fraud. This should happen cautiously and in a controlled manner, of course. If you manage this carefully, the increase in revenue will far outweigh the additional fraud risk. The fraud team is also a sales enabler, as much as it is a fraud prevention team.
– Danièle Thillmann, senior VP fraud and customer service at Green Man Gaming
5. Collaborate closely with customer support. Make sure your customer support policies are in line with increased sales from the season rush. For example, if sales increase then contact with your customer support team may rise accordingly. Make sure to work cross-functionally to arm your support team with intel so they can continue to please your customers, which will help avoid chargebacks due to dissatisfied users.
– Tal Yeshanov, Uber
6. Look out for friendly fraud. “Friendly” fraud or unauthorized transactions placed by an acquaintance tend to rise over the holidays – especially as a new wave of younger shoppers start using the computers and devices they just received to shop online.
Keep an eye out for multiple accounts that share a family name, similar geolocation attributes, and payment instruments with a known good user.
– Vinson Lee, business operations at Sift Science, previously trust & safety at Google
7. Keep an eye on seasonal fraud patterns. Make sure someone is watching for trends. Last year, much of our fraud came from Caracas, Venezuela. Once we discovered this, it was easy to reject these orders and narrow down the pool for potential fraud. Once you see trends, be sure to label users in Sift Science.
– Courtney Bode, Wanelo
Sarah Beldo is the communications manager at Sift Science, a trust platform that offers a full suite of fraud and abuse prevention products designed to attack every vector of online fraud for industries and businesses across the world.
October retail hiring lowest in six years
Retail hiring took a dip in the month leading up to the holiday shopping season.
The sector added 136,700 jobs, which is down 8% from last year and the lowest October gain since 2011, according to an analysis of Bureau of Labor Statistics data by global outplacement and executive coaching firm Challenger, Gray & Christmas. It’s the second year of declines and comes as fewer major retailers announced large-scale hiring plans.
“The shrinking job gains in retail during the holiday season are indicative of the changing consumer habits and overall transition the industry is experiencing,” said John Challenger, CEO of Challenger, Gray & Christmas.
Overall, seasonal retail hiring has fallen each year since 2013, according to the firm. Last year, October gains reached 149,400, 18.5% lower than 2015.
As of October, there were nearly six million (15,827,700 Americans employed in the retail sector, which is 56,600 fewer jobs than the 15,884,300 employed in October 2016, according to non-seasonally adjusted data from the BLS.
Meanwhile, employment in the transportation and warehousing sectors stood at 5,151,400 in October of this year, 111,400 more jobs than in October 2016.
“The ‘Amazon Effect’ and consumers’ online shopping habits are definitely shifting seasonal job gains from traditional retailers to warehousing and transportation positions,” said Challenger. “New technology in retail also eliminates the need for some back-office operations, which may lead to less hiring.
However, this new technology may change the nature of the work as opposed to replacing workers altogether.
“For instance, Walmart instituted shelf-scanning robots in their stores that flag issues for human workers to fix,” added Challenger.
Nordstrom offers new twist on curbside pickup
A department store retailer is extending its holiday hours in a different way.
Between Dec. 16 and Dec. 24, Nordstrom will offer a curbside pickup service in 10 stores seven days a week, and 24 hours a day. Nordstrom expects the program to give digital shoppers more flexibility during the holiday season.
The 10 stores that will offer the service are in Seattle and Bellevue, Washington; Chicago and Oakbrook, Illinois; Dallas; Maclean, Virginia; White Plains, New York, Costa Mesa, San Jose and San Diego, California.
Here’s how the service works: Customers who have placed a buy online & pickup in-store order from Nordstrom can call or text the “Curbside Pickup” phone number — which can be found in their order confirmation email — 10 minutes before arriving at the store. Upon confirming the order, a Nordstrom employee will meet customers at the dedicated curbside pickup location with their merchandise.
During the holiday season, customers can also text the word “gift” to the Curbside Pickup phone number to receive a complimentary gift wrap kit with their purchase, Nordstrom said.
The curbside pickup program will also augment Nordstrom’s other customer services, including buy online, pickup in-store; reserve online, try on in-store; express alterations and same-day delivery.
The initiative comes on the heels of Nordstrom’s decision not to take the company private this year. In June, the company announced that members of the Nordstrom family, who own approximately 31.2% of the company’s stock, had formed exploratory group to research the possibility of taking the company private.
As lenders became increasingly cautious amid today’s unstable retail climate, Nordstrom’s controlling family members announced last month that they would suspend active efforts for the remainder of the year.