How Retailers Can Become Fraud Protected During Back to School Season
By Don Bush, Kount
Back to School season is right around the corner, with an onslaught of retailers, parents, and students alike entering a busy shopping season. But increased sales periods like Back to School shopping means increased fraud activity, with pricey necessities like textbooks often a target since they resell quickly at high dollar amounts. Unlike previous years, online retailers will have a tougher time distinguishing fraudulent transactions from the legitimate this year, with the recent challenges of data breaches, the shift to EMV last year, and that more than 60 percent of parents planning to use their mobile devices to shop.
Here are a few tips that retailers can implement to prepare themselves for the busy Back to School season and strengthen fraud protection among their sales channels and customers for a better shopping experience.
Keep Your Chargeback Rate in Check: While stores may think they’re ringing in record sales during the fall, remember that there’s a 60 to 90-day lag in chargeback reporting. Not only will you have missed the chance to stop fraud, but an audit to identify the cause of that fraud will be expensive and difficult. Especially for small and independent businesses, those losses can be even more consequential. Minimize your losses by accounting for chargebacks and choosing the best rate of chargebacks for your store. High-risk transactions can lead to higher sales but increased chargebacks. On the flipside, declining more high-risk transactions can reduce chargebacks but leave you with lower sales. Every store is different, so understand what your business can handle so that the revenue generated by borderline approvals consistently exceeds the chargeback costs of those approvals.
Maximize Mobile Options – with Fraud Prevention in Mind: Retailers, particularly apparel and accessories merchants, are eager to capitalize on the increase of mobile shoppers and maximize mobile revenue. There’s a number of different strategies retailers can employ to optimize to lower mobile abandonment and expedite checkout including a dedicated mobile site, responsive design (which adapts to the device being used), or a hybrid of both via dynamic serving. But there’s no use in optimizing mobile checkout if it’s going to be dominated by fraud. LexisNexis says the hidden costs of fraud for mobile is 27 percent higher than for conventional eCommerce. Furthermore, following the shift to EMV, fraud rates for eCommerce/card-not-present (CNP) transactions are also forecasted to increase significantly. Retailers should utilize technologies like mobile device ID, mobile geo-location, and personas which can help better screen mobile fraud and minimize mobile fraud loss.
And be mindful that not all mobile fraud prevention tools are created equal – some require custom integrations based on website infrastructure. This can generate extra costs and delays if you want to modify your mobile strategy, platform, vendors or design. Choose a solution that operates independently of your mobile website infrastructure or can embed directly into your app, so you always have complete freedom to choose the strategy that maximizes your financial returns. If you have an app, there are also tools that allow you to natively embed fraud prevention.
Beware of Big Ticket Items: Knowing that stolen cards or account details have a short lifespan before the real owner realizes their card has been stolen, fraudsters seek to maximize their profits by purchasing big ticket items. During the Back to School season, fraudsters are targeting expensive essentials like textbooks, calculators, and computers which they can resell easily. On average, a fraudulent transaction is twice the normal sales average, so keep an eye on transactions that are higher than the average purchase during this time of year.
In addition to pricey items, fraudsters will often attempt “card testing” – running multiple transactions on one card or multiple cards to validate stolen credits and leaving a trail of chargebacks and upset customers in their wake. Watch out for multiple transactions from different cards coming from a single IP address, which is a strong indication of fraud.
Combatting fraud, especially during a busy shopping period, isn’t an easy A. Just like a class schedule, it includes a bit of art and science. You can stop 100 percent of fraud and stop selling, but that’s not going to boost the bottom line. By implementing the right tools and systems tailored to the needs of your business, you and your customers will be more likely to make the most of this busy sales period.
Contributed by Don Bush of Kount. Kount helps businesses boost sales by reducing fraud. Our all-in-one, SaaS platform simplifies fraud detection and helps online businesses accept more orders. Kount’s turnkey fraud platform is easy-to-implement and easy-to-use. Kount’s proprietary technology has reviewed billions of transactions and provides maximum protection for some of the world’s best-known brands. Merchants using Kount can accept more orders from more people in more places than ever before. For more information about Kount, please visit http://www.kount.com.