Callcredit Blog

Tackling Fraud in Retail on Black Friday

Fraud & Verification

Ryan Kemp, director of retail at TransUnion in the UK advises retailers on how to tackle the fraudsters as the peak online shopping period draws near
Consumer shopping fraud

This year’s Black Friday offers a fantastic commercial opportunity for retailers – in spite of an expected slowdown in sales overall and uncertainty in consumer spending. Last year, UK shoppers spent a reported £1.49 billion online over the Black Friday weekend, contributing to a robust fourth quarter. This year the analysts tell us we can still expect a relatively stable Q4 with all things considered, but consumers may delay purchasing to Boxing Day and January sale events.

The ONS reported that November 2018 saw online sales as a proportion of all retailing exceeding 20% for the first time, though in-store spending dropped 7%. What this means, simply, is more competition for the consumers’ attention and spend, and a focus on digital commerce as a channel to win it with. This year is certain to see growth in mobile traffic and will also be the first year for new channels such as voice commerce to be used in substantial numbers.

Given the scale of the digital spend, the competition and activity around this key commercial event, it’s a testing time for retailers’ fraud and cyber security teams. Anyone attempting to compete should ensure that they have the appropriate measures in place to foil opportunistic fraudsters. This means investing in the best monitoring and anti-fraud technology you can afford, based on robust risk analysis of threats and vulnerabilities.

Omnichannel retailing opens up several touchpoints for the consumer to take advantage of, but similarly presents a great opportunity for fraudsters, with recent research suggesting nearly a quarter of UK consumers (24%) who have shopped on Black Friday or Cyber Monday have experienced attempts at fraud during the weekend sales. E-commerce is competitive and users demand a seamless customer experience. This can be achieved at the same time as protecting both the consumer and the business. There are a few simple guidelines that retailers can follow to minimise the risks of fraud attacks this Black Friday.

Be scam savvy. With consumers increasingly wary of the harm online scams can do, they are becoming more conscious of suspicious emails. Help them understand how to spot fraudulent activity and when using emails, direct them back to your main website so they can easily verify they’re in the right place. While email is a crucial method of communicating with customers, think about how to engage them in other ways as well, so you’re not overly reliant on that particular channel and your customers have a range of access points – but be aware the fraudsters will operate across all of these too!

Secure checkout. Forthcoming regulation (PSD2) although delayed, means businesses need to up their game when it comes to the security of online payments and accessing accounts. Using two-factor authentication and having additional fraud prevention in place for card-not present (CNP) transactions can help keep your customers, and your business, safe. Retailers are often wary of adding additional steps into the customer journey but there are strategies available to ensure a smooth customer experience whilst prioritising security and complying with regulation. One-click purchasing may give a smooth experience, but it also means less opportunities along the journey to prevent fraud.

Track and trace. Consider how you track the customer journey. As channels and methods of shopping proliferate, it’s vital to shut off any potential intrusion resulting from new technology or channels. Identifying individual customers and setting alerts when activity doesn’t fit an expected pattern can help prevent fraud on your platforms. Make sure you have the right digital checks in place at different touchpoints.

Stop fraud in its tracks. ID checks are essential for preventing fraudulent purchasing and applications for credit-based purchases. The UK’s leading fraud prevention service Cifas noted a 90% increase in facility takeover in 2018 for UK online retailers; the latest available figures. This is where a fraudster has gained access to an account and makes purchases using pre-loaded payment details. In addition, identity fraud is up 18% – where the fraudster attempted to obtain credit in the name of an innocent victim.

Activate, monitor, adjust. Your customers are tracked and monitored from the second they search for you or click an email link, through their purchase journey to completion and beyond. Make use of the massive quantity of quality data from this busy period to learn what the “new normal” is for consumer online retail behaviour and ensure your security and experience designers are learning. You can improve both your site and security for the future using the data created in November, as long as you have the right analytical tools in place.

Black Friday fraud prevention is not just a November project – it’s a process of continuous development of best practice in a changing retail world. It’s complex, but following some simple guiding principles will ensure Black Friday and Q4 deliver memorable results for the right reasons.

Find out more about how TransUnion can support retailers here.

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