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Ready for holiday shopping fraud?

Posted by Michael Bloch in ecommerce (Friday November 28, 2008 )

While many merchants are worried about how the economy will affect this year’s holiday sales; something you can bet on is that the fraudsters will be out in force; shopping until they drop – or get caught.

As technology and strategies evolve to prevent fulfilling fraudulent transactions, the fraudsters aren’t giving up; evolving their own new tactics, including new social engineering angles. Social engineering in relation to fraud is the process of manipulating people into taking an action or providing confidential information.

As an example, a flag for a possible fraudulent transaction is a request for overnight shipping. According to this article on Internet Retailer, some fraudsters are ordering online and specifying standard shipping, waiting for the transaction to be approved, then calling the company’s customer service team and having the shipping changed to overnight.

According to CyberSource, 1.3% of online sales in 2007 were fraud – up from 1.1% in 2006. Fraud is a quadruple whammy for online merchants as they not only lose the goods, but often get hit with a chargeback (usually around $30 a pop) and enough chargebacks chalked up can threaten their merchant account or mean higher transaction processing fees.

The holiday season is a favorite time of year for fraudsters as many merchants are more distracted through increased business and it’s more likely they’ll lapse on thorough screening of transactions.

As the old saying go, a dollar saved is a dollar earned – don’t lose your hard earned holiday bucks this year, pick up some tips on screening for credit card fraud.


Preventing and reducing chargebacks


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