With Black Friday and Cyber Monday approaching, online sellers are gearing up for the most important sales event of the year. Unfortunately, fraudsters are also gearing up and consumers are concerned.
According to a new report from TransUnion, nearly half of consumers (46%) are worried about becoming a victim of fraud this holiday season, yet they also want a convenient online shopping experience. 68% say they want online retailers to protect both their Login IDs/passwords as well as their credit card information.
A surprising 84% of Millennials plan to do more than half of their shopping online, while 78% of GenX, and 76% of GenZ plan to, yet only 68% of Boomers will do the majority of their shopping online.
TransUnion’s Geoff Miller, head of global fraud and identity at TransUnion, notes: “For retailers, providing a seamless transaction experience can be a make or break situation during the ultra-competitive holiday shopping season as consumers have many shopping options online and in brick and mortar stores.”
Fraud protection strategies for retailers
When it comes to protecting customers, there are several easy to implement tactics to decrease fraud risk for merchants.
“Retailers should take advantage of fraud and security technologies that can proactively identify high-risk identities, devices and user behaviors. For example, an excellent device intelligence solution can accurately pinpoint a fraudulent device used by someone running a bot or is located out of the country. It can also identify hijacked accounts or ones that had fraudulent activities in the past. It is also helpful to have access to accurate and complete consumer identity data so retailers can achieve fast and error-free authentication,” said TransUnion’s senior director of retail Shannon Wu-Lebron.
Retailers should assess the risks of the devices consumers use to interact with them according to Wu-Lebron. “This does not require the consumer to take any additional steps yet can reveal tons of information on who is behind the transaction,” she said.
Merchants often have capacity challenges during the high-volume holiday sales season. “Retailers have limited bandwidth to deal with risky transactions that require manual review. They run the risk of either approving fraudulent transactions or rejecting many good customers for fear of getting chargebacks,” Wu-Lebron noted.
Fraud/user experience tightrope is a challenge
Trans Union research found that while all generations want security as well as convenience, Gen Z are far less worried about being victimized by fraud (38%) than older generations such as Baby Boomers (54%).
“Younger generations are more confident in their use and understanding of digital technologies, therefore, are less concerned about the risks. They realize there are risks but generally feel that it can be managed and controlled. They tend to focus more on the value and experiences of digital interactions,” Wu-Lebron added.
That still leaves online merchants with the challenge of trying to balance security with a positive user experience.
Encouragingly, 57% of consumers said they were likely to go through the extra steps of verification to complete a purchase even if a company suspended their order due to concerns of possible fraud. And while 56% of respondents said they view additional identity validation requirements positively during the check-out process, nearly four in 10 respondents (39%) held a neutral view of this process.
There’s simply a risk of too much friction for the consumer at checkout.
Jerry Ray, COO at SecureAge, a global cybersecurity business based in Singapore, agrees merchants can protect consumers without adding friction to the buying journey.
“Protect customer data at all costs with file-level encryption backed up regularly to external/offsite storage. Real-time file-level encryption of databases, transaction files, invoices, receipts, and anything else on the systems of retailers will prevent not only loss of customer data through breaches, but also quick restoration of data in the event of a ransomware attack,” Ray advised merchants.
He also suggests shoppers use a credit card, as opposed to a debit card, for online purchases. “If a retailer’s customer data is not encrypted and compromised, unrecognized purchases against a credit card versus mysterious deductions from a bank account will be easier to stomach while working through the issue with banks,” Ray said.
Ray suggests consumers turn on alerts through online banking portals with whichever credit card (preferably just one) that will be used for holiday shopping. Receiving these alerts in real time through text messages will help to both confirm the amounts of legitimate purchases made, as well as identify the illegitimate ones.
“Be on the lookout for unsolicited deals through email, text messaging, or social media that either appear outrageously generous, or require the downloading of a mobile app or desktop application. And, while never overstated, be sure to look for “https” to precede any web address, as well as the “lock” icon when starting the purchase sequence.
Merchants are optimistic about a positive holiday sales season. Consumers are excited and planning to spend more this year on holiday shopping according to analysts. With the right attention to fraud prevention and customer experience, merchants and shoppers are in a position to benefit.
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