Holiday shopping season is just around the corner. (Yes, really.) There’s plenty to do over the next few weeks to get ready, so we’ve put together a series of tips to help you prepare.
The reality is that, for some of you, it has felt like the holiday season year-round since the onset of the pandemic. Still, peak season transactions can account for 30 percent or more of some retailers’ total yearly volume. Combine increased transaction volumes with targeted promotions, new payment methods, and new transaction channels and you may find it is harder to keep up with emerging fraud trends. A common way to combat increased fraud is to send more transactions to manual review—ultimately increasing overhead costs and potentially delaying customers from receiving their purchases.
Drawing on the experience and insights of Cybersource Managed Risk Analysts worldwide, we’ve put together a series of tips to help you prepare for holiday shopping season and protect your business against fraud and risk while delivering a frictionless experience for genuine customers.
Tips to prepare for the holiday shopping season
Preparing for the holiday shopping season may seem overwhelming at first, so we’ve organized our tips into three phases: evaluation, implementation, and preparation. This post will cover evaluation, and our next post will dive into implementation and preparation.
Phase 1 – Evaluation
Tip: Transaction flow review
From checkout to delivery, there are several important steps that make up a seamless shopping experience. You should conduct an end-to-end review of the transaction flow—and where fraud checks are conducted—regularly and align them with your business goals and brand. The first step is often authorizing the payment, but some businesses screen transactions pre-authorization. Others choose a combined approach, targeting fraud tactics such as card testing and removing transactions that would be rejected due to negative attributes prior to authorization, with a more thorough screening post-authorization. Processes like Visa Advanced Authorization (VAA) and Visa Risk Manager (VRM) use transaction data to reduce false declines while preventing fraud more accurately. Assessing risk screening throughout the customer journey proactively can help to identify vulnerabilities before peak season.
Tip: Internal policy review
In many cases, rejects are driven more by business policy violations than suspected fraud. Take time to consider your business from a customer’s perspective and ensure there is clarity around business policies. Poor policy management can lead to an influx of customer complaints, chargebacks, and the loss of future sales. Here are some ways you can improve transparency:
- Avoid hiding terms and conditions, policies, or procedures in fine print. Even if this is unintentional, it can lead to complaints, confusion, and chargebacks. Let your customer know what you expect from them, and be transparent about it.
- Ensure there is transparency around inventory and invoicing. For example, is the customer aware that something is out of stock before they hit the purchase button? Does your business allow split or drop shipments, and how does that impact invoicing? Don’t shy away from over-communicating. This can help you combat customer disputes further down the road.
- Customers should know what to expect before they hit the submit button. Additionally, if the shopping experience is unpleasant, what are the customer’s options? Where can they find your refund and return policies?
Tip: Collaborate with marketing
Your marketing and sales teams put a lot of effort into planning peak season sales rollout, including:
- Which products will be on sale.
- How they’ll be marketed to different target groups.
- The launch schedule for marketing campaigns.
You may already be planning changes to your fraud strategy that account for different customer spending patterns during peak season. However, when you layer in sales and promotions, those changes in spending patterns can look even more extreme. To avoid adding unnecessary friction, consider making changes that tie in with those campaigns. Furthermore, if the marketing messaging might promote fraud or negatively impact your responsibilities, speak up; marketing will likely appreciate the feedback but has many teams to consider during campaigns—and fraud is often not top-of-mind.
Tip: Fraud strategy review
A thorough review of your current fraud strategy is critical during this phase. What lessons did you learn from peak season last year? Has your business changed in some way, or have fraud patterns shifted? Given the ongoing advances in technology, it has gotten tougher to keep up with emerging fraud patterns during the hustle and bustle of peak season. The traditional predictors of risk in data are no longer enough. Instead of increasing the number of orders in review, consider whether your strategy could benefit from insights delivered from transformed data—positive and negative indicators derived from powerful consortiums—to help go beyond surface-level attributes.
You might also consider leveraging a fraud consultant or analyst to help you evaluate your current strategy to identify gaps. We hope you’ll learn from this exercise that the vast majority of your transactions are valid, and the more decisions you can automate, the more you can focus on the overall business.
Tip: Business review (internal)
Consider what is different about this year’s business goals and how you are contributing as a fraud team to the business’s success. For example, your business may have recently rolled out new shipping methods like BOPIS that have the attention of your executive team. What can you do to help promote the success of BOPIS?
- What is marketing doing to promote BOPIS?
- Does your order flow allow you to support BOPIS?
- Are there any policies that are contradictory or need updating?
- Are you being transparent with customer expectations?