Peak shopping season is just around the corner. (Yes, really.) There's plenty to do over the next few months to get ready, so we've put together four tips to help.
During the upcoming holiday shopping season, you’re likely anticipating higher-than-usual sales. Holiday sales can account for 30 percent or more of the year’s total revenue for many businesses. To take advantage of your customers’ increased appetite for shopping at this time of year, you may be creating unique offers, special promotions, and even using new marketing channels.
These could open your business up to increased fraud risk or lead you to think about how to prevent fraud to ensure you’re keeping your customers and your business safe.
Drawing on the experience and insights of our experienced risk analysts, we've put together four tips to help you protect your business against fraud, while delivering a great shopping experience for your customers.
Tip 1. Understand the holiday chargeback cycle
Chargebacks, or charges returned to payment cards after customers dispute items on their account statements from orders placed during peak season, may be reported up to 120 days after the purchase. So that the financial impact of chargebacks doesn't catch anyone off guard, make sure that you understand the holiday chargeback cycle. To do this, create a chargeback forecast based on:
- Chargebacks reported in 2020
- 2020 peak transaction volume
- 2021 peak volume expectations
If the forecasted amount makes you think twice, you may need to plan for fraud prevention updates. Authorize.net customers use our Advanced Fraud Detection feature to identify, manage, and prevent suspicious and potentially fraudulent transactions.
Tip 2. Identify your promotional and sale periods
You’ll likely put a lot of effort into planning your holiday promotions, including:
- Which products will be on sale
- How they'll be marketed to your customers
- When you’ll launch marketing campaigns
You may already be planning changes to your fraud tool settings to take account of how customer spending patterns are different during holiday season than at other times. But when you layer in sales and promotions, those changes in spending patterns can look even more extreme.
To avoid adding unnecessary friction, consider taking extra fraud prevention measures. Think about, for example, loyal customers who receive an email promoting a product that's available at a special price on a certain day. When a customer goes to buy three of them on the same day, your fraud prevention tool needs to be able to recognize this behavior as normal and prevent standard fraud screening checks (such as velocity) from flagging the order as suspicious. Make sure it maximizes legitimate transactions while limiting potential fraud.
Tip 3. Manage product restrictions driven by COVID-19
We've seen the toll that COVID-19 has taken on manufacturing and supply chains over the past year or more. As peak shopping season approaches, those effects continue to be felt. You'll need to work out whether to apply quantity restrictions on any of your products and, if so, what those restrictions should look like.
Although eCommerce websites can generally restrict the number of identical products that can be bought at the same time, customers wanting to buy larger quantities may simply bypass these restrictions by making multiple purchases.
To prevent that, you should create limitations (or policy rules) within your fraud prevention tool to limit purchases of a specific product to, say, two per day per email address. You'll want to be sure you build and test this kind of functionality well ahead of peak season, and that you're ready to make last-minute adjustments to reflect the supply chain situation.
Tip 4. Start planning your peak season staffing
The holiday season generally brings staffing challenges, but COVID-19 has made it more difficult than ever to find the right people, even on a temporary basis. Get a head start on the hiring process by preparing for new hires.
But hiring is only half the battle: You also need to train them. (This takes time—so another reason to plan well ahead.) Set expectations with your company's training team so that they know what resources they need to provide, and when—especially around how to prepare for fraudulent activities.
Our Advanced Fraud Detection tool filters are built directly into the Authorize.net platform. Learn more about the benefits of the Authorize.net Advanced Fraud Detection suite.