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A new study finds US consumers have spent $1.7 trillion online during COVID: A whopping $609 billion more than in the previous two years. As we learn more about new consumer spending habits following several tumultuous years, brands are focused on retaining their old customers while targeting new ones. That presents its own challenges as brands are also navigating rising inflation and increasing shipping and labor costs. It also means many aren’t putting ‘combat fraudsters’ as highly on their to-do lists as they should.
With holiday season planning well underway for many brands already, now is a great time to reevaluate how to best prepare your systems and teams for a busier time of year. Making those changes where needed sooner rather than later can save businesses from a much bigger headache during the most critical time of year.
With more spending comes more responsibility
With more consumer spending, brands face more responsibility to implement tactics that mitigate fraud and protect not just themselves, but their shoppers. Holiday spending historically drives up online traffic, which is a perfect environment for fraudsters to hide their activities. Fraud cases continue to grow and take new forms around the world, which means brands will have to make tough decisions about where to invest money back into their organization. In 2021, businesses around the world reported $20 billion in fraud costs alone. As we approach what is typically one of the biggest seasons for consumer spending, the holidays, imagine what that number will look like a year from now — and how that will affect the bottom line for brands that aren’t prepared.
As brands continue to compete for consumer attention, any concern about fraud can become a deciding factor for sales from even the most loyal customer. Companies must concentrate on the detection and mitigation of fraud to stay at the top of their consumers’ list of trusted brands. Prioritizing training and deploying the right technology can make a world of difference.
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Front lines: Training and new technology
Focusing on fraud starts in the most basic company processes. For starters, businesses should clearly communicate store processes so staff can easily follow and enforce the proper policies. Ensuring clear communication from top to bottom and bottom to top will allow teams to better mitigate fraud by knowing the correct policies and procedures to enforce. This, in turn, allows employees to push back on threat actors who may otherwise have been able to trick the team.
Digital solutions are also key. Retailers need insight into the entire order process, from the moment a consumer clicks ‘buy now’ all the way until the customer grabs the package from their mailbox. That allows your team to constantly re-evaluate every step of the process. The gaps that form when companies don’t know their roadmap allows threat actors to creep in — especially in the checkout process where so much sensitive information is revealed.
Fraud and sales: Securing checkout
Streamlined checkout processes are every consumer’s dream. Whether you stand out for your one-click checkout process or your customers enjoy the ability to save their address and card in their account for more streamlined shopping, it’s no surprise that ease of purchase is a top priority for shoppers. Equally as important is securing those processes for users. Whether they know it or not, those very luxuries and simplifications have complicated back-end processes that are crucial for consumer (and brand) safety. These processes can be attractive for fraudsters given the breadth of information waiting behind a wall of code.
There are ways to make your checkout process both seamless for consumers and secure without introducing additional friction for shoppers. Now is the time to develop new fraud modeling and AI scoring specific to sales during the holiday time frame. Reassess the impact of your current fraud rules and eliminate those that are less effective. While the holiday season is ideal for attracting new customers, those customers pose a challenge because they are first-time purchasers on your site. Leverage consortium and machine identity data for unique insights to the purchaser’s history and device settings. Merchants should stratify transactions by risk to ensure their resources are focused on those transactions that are truly at risk. Having expertise in this area is critical to strike the balance between detection and mitigation —needless friction can quickly drive away customers. Organizations without those capabilities already in-house can look to external partners who have the expertise to build a process that protects your site, while still locking out fraudsters.
Beyond just consumer concerns, brands need to be careful of their own critical data that can be compromised when threat actors target them. With holiday shopping just around the corner and new customers continuing to enter the market, nailing every consumer interaction is key.
The bottom line is simple: Fraud will likely continue to rise, and those fraudsters will keep identifying new ways to steal from brands and consumers alike. Companies that don’t take the time to prepare now will lose revenue — but beyond that, they may also lose their customers.
Eric Christensen is chief payments officer at Digital River.