Payment fraud prevention specialist, ReD, helps retailers manage holiday season fraud with checklist


While the festive shopping season can provide a huge injection of revenue for most retailers, it also inevitably attracts fraudsters who take advantage of last minute shopping trends and smaller delivery windows, hoping their activities will pass undetected in the heightened volume of traffic in attractive, often high value purchases.

So, how do merchants efficiently process the season’s major increase in CNP transaction sales while continuing to provide a positive experience for new and established customers?

ReD has put together a peak season Fraud Prevention Checklist to help guide merchants as they address this challenge.

1. Review and prepare your systems

    • Deploy automated risk strategies – by deploying automated risk strategies you can reduce manual review rates and lower call centre operational expenses, helping to control the demand on internal resources
    • Utilise early warning indicators – ensure you have access to early warning indicators, such as acquirer reported fraud, to reduce exposure and mitigate losses as quickly as possible if under attack

2. Identify your weak points

    • How were you compromised last year? – Understand where the pitfalls were and tailor your strategies to ensure it doesn’t happen again. For example, if delivery fraud was a problem, you could identify postcodes which need higher review rates and re-focus reviews and resources from areas which pose less risk
    • Consider anything that’s changed since last year – what changes have been made to product lines, sales channels, available payment methods and delivery options? Are these new initiatives protected with specific and tailored fraud rules and strategies?

3. Consider the customer experience

    • Identify your loyal customers – customers shop across a variety of channels and touch points – it is important you recognise them, regardless of the device or sales channel used
    • Utilise customer profiling and time on file – using these tools within the fraud strategy can help to maintain the customer experience for valued customers. You can use them to adjust your rule set so that good transactions are still accepted

4. Be proactive, understand trends and learn from manual reviews

  • Analyse and monitor your fraudulent hot spots and trends – understand which cards, IP and email addresses pose the biggest threat – ensure you monitor them and factor them into your rules and alert triggers
  • Use all available data – Retain one individual to look holistically at data and trends including decisions, individual performances, rules, volumes and KPIs. Also remember that manual reviews are still important and every review adds to the wealth of fraud intelligence you can use to inform your decision-making process

5. Communicate with your business

  • Talk to colleagues – Cross-functional communication (with IT, finance, customer services and marketing colleagues) can help build a picture of what happened last year.
  • Understand this year’s campaigns and promotions – is your marketing team planning anything that could inadvertently provide opportunities for fraudsters? Ensure you have all the information you need and raise concerns and potential problems…but offer solutions via processes and reporting
  • Adjust your rules accordingly and in advance – ensure your rules allow for the potential changes in customer buying behaviour that may result from these seasonal campaigns. Monitor for effectiveness throughout the season to ensure a good balance between customer service and risk mitigation

The key to a safe and successful Christmas trading period is to communicate, collaborate and plan, ReD adds.