A recent survey by PowerReviews reveals how and when consumers will approach holidays and what influences their purchasing decisions. Nearly 8000 customers provided insight into their shopping habits and intentions for this holiday season. We focused on stats relevant to the online shopping side of the story and filtered the most important findings.
Fraud related findings state the following:
These stats tell us that the shopping season started particularly early in 2021, as early as September. This gives the fraudsters more time to operate on busy grounds and take advantage of overlooked billing statements. Although the percentage of consumers who plan on shopping online this year (41%) is lower than the one in 2020 (64%), it still indicates a consistent growth of consumers turning to online shopping. Keep in mind, in 2020, Covid-19 restrictions prevented consumers from shopping in brick-and-mortar stores. It is expected that a portion of that 64% from 2020 will return back to their old habits and enjoy holiday shopping in-store.
Also, data referring to the importance of returns and refund policies indicates that the cardholders are more aware of how to protect their purchases. On the other hand, there is a number of bad guys who use these policies for their own gain and abuse the refund and chargeback system. Merchants need to prepare for increased numbers of chargeback disputes and develop efficient workflows on how to filter cases that are worth fighting for.
The holiday shopping season is in full force, and so is the fraud that comes with it. We can't talk about exact stats yet, but some things are sure. Following is what financial institutions, merchants, and cardholders can expect in the upcoming days:
Here are the tips on how to handle the holiday shopping season by mitigating risk and following best practices:
Review historical data from previous years and find common patterns for fraudulent/damaging transactions. Document these findings, design workflows for approving/declining orders, point out key criteria for determining suspicious orders, and define the next steps after a transaction is flagged as suspicious. Ensure that your teams are up to date with mentioned processes by providing additional education regarding fraud prevention during the holiday season.
An increased number of incoming chargeback disputes is inevitable. This is due to the higher volume of online shopping, which sometimes causes confusion when a cardholder takes a peek at their billing statement. Oftentimes they don't recognize transactions because of bad billing descriptors and merchants at whom they shopped for the first time. Set yourself up for success, take a look at our blog post Merchant Guide: How to win a chargeback dispute?
As mentioned, returns and refunds will be flowing in at a higher rate than usual. Adjust your return and refunds policy for the time being. Limit the return date for high-value items, set cutoff dates during the holiday season. While you're at it, take a closer look at your policy and search for potential loopholes that the fraudster might take advantage of.
Account takeover attacks are also common to make an appearance at a higher velocity during holidays. A swarm of new accounts makes it even more difficult to determine if a legitimate owner of the account is making a purchase. To minimize risk, enable two-factor authentication to your users, watch out for spoofed versions of your website related to stealing user login credentials, and put effort into detecting data breaches.
By implementing 3D Secure 2, merchants are shifting the liability for fraud to the issuing bank. That means that all losses caused by a proven fraudulent transaction will have to be covered by the cardholder's issuing bank.
Learn more about 3D Secure 2 technology on our blog or contact our team of experts at [email protected] to get a free, zero-commitment consultation.