Fraudsters will use every tactic to take advantage of the unprecedented increase in the number of online shoppers this holiday season. In this environment of increased digital traffic, online retailers are obliged to safeguard business and customer interests. They must, therefore, adopt a fraud-prevention approach that can both protect from holiday fraud as well as help fuel business growth
The year 2020 has been an unprecedented year, and so too will be this holiday season. However, a forecast of record-shattering holiday season sales, amid all the pall and gloom unleashed by the coronavirus pandemic, is certainly good news. The shopping trends this year will be significantly different from the years gone by, as the world continues to reel under the effects of the ongoing second wave of infections.
With supply chains remaining disrupted and many physical retail stores expecting lower foot traffic, shoppers will need to rely on the digital channels for their holiday shopping. A Wells Fargo survey indicates 70% of consumers are unlikely to return to offline stores in the near future. This means that the spike in traffic that online retailers and ecommerce platforms have been witnessing since the lockdowns were enforced earlier this year, will grow even more.
Online holiday sales this year in the US are expected to reach $189 billion, registering a 33% YoY growth, according to Adobe Analytics. The forecast adds another $11 billion towards online sales if consumers receive second stimulus checks and offline retail stores remain shut in large parts of the country.
Brace for increased holiday fraud
As millions of shoppers flock to online retail websites, apps and ecommerce platforms this Black Friday to score deals and buy gifts, fraudsters will try to take advantage of this flurry of activity to target both consumers and businesses alike. Aware of the multiple challenges businesses face with a surge in online traffic, fraudsters try to blend in with authentic customers to exploit the business networks. They game the watered-down authentication processes to create multiple new fake accounts and gain unauthorized access to genuine user accounts through account takeover attacks.
Payment fraud, gift card fraud, DDoS, inventory hoarding, fake reviews, spam, and phishing are also some of the common types of holiday fraud. In the wake of economic hardships that consumers are facing around the world, friendly fraud will likely also increase. Fraudsters will look to monetize this opportunity, too, as the demands for refunds surge. Holiday season is also an opportunity for fraudsters to skim cards. As digital is the flavor this shopping season, fraudsters will look to harvest credit card data of the consumers at checkout by installing malicious codes on the retailers’ websites.
Bots will drive the holiday fraud and ‘profits’
Black Friday is one of the biggest sales events for online retailers, especially in the US and the UK. And much like these businesses, holiday shopping is the most ‘profitable’ season for fraudsters, who use bots to scale up the attacks and maximize the returns. Not only do fraudsters use bots to quickly buy out limited-edition items that can be resold at a premium later, they also deploy bots to hoard inventories that force shoppers to spend more elsewhere and allow attackers to extort money from the affected businesses. Bots are also used to brute force gift cards so that fraudsters can exhaust the monetary value of the cards even before the recipients get a chance to use them.
Bots can disrupt the online user experience for authentic users by making it extremely difficult for them to score good deals or buy discounted items. Discontented consumers are the last thing online retailers want during the peak sales period, as it adversely affects business growth and negatively impacts their brand equity.
Cut the noise out to eliminate fraud and abuse
Black Friday marks the beginning of a busy commercial period where businesses look to acquire new customers. However, authenticating and reviewing every incoming user, when the volume of incoming traffic increases exponentially, can overwhelm the fraud teams. Therefore, businesses need a fraud-prevention approach that cuts the noise out to accurately pin down the fraudsters and take the burden off of the fraud teams, without disrupting the user experience for authentic customers.
Further, consumers today expect businesses to offer a seamless user experience while adequately safeguarding the integrity of their financial and personal data. Businesses are obliged to ensure security of consumer data while offering a seamless, multi-touch user experience. This can happen only when online retailers can accurately understand the true intent of incoming users and deploy appropriate countermeasures that can stop fraudsters right at the entry gates.
Arkose Labs helps to lead online retailers to maximize sales and offer a seamless user experience to authentic users without worrying about attackers abusing the business networks. This is because the Arkose Labs platform shifts the attack surface from the business network to its own and uses targeted friction to eliminate fraud from its roots. Proprietary 3D puzzles make authentication fun for genuine users, while bots and automated scripts fail instantly. Persistent, malicious humans face incrementally complex challenges that waste their time and resources to make the attack economically non-viable and force them to abandon the attacks.
To learn how Arkose labs helps global online retail brands fight holiday fraud to balance business growth with exceptional customer experience, book a demo now.