Legitimate Shoppers Take Advantage of Deals, Outpacing Seasonal Growth in Fraudsters

We’re quickly approaching what is – for many eCommerce merchants – the most wonderful time of the year: Cyber Weekend. The biggest online shopping period of the year runs from this Friday, November 29 through Monday, December 2, and a new report from Riskified, the payments and fraud-prevention solutions provider, helps merchants get ready to handle sales volumes five or six times higher than average. The report reveals that the full holiday shopping season is substantially safer for eCommerce merchants, as the increase in sales volume from legitimate shoppers far outpaces growth in fraud attempts. In addition, it shows that purchases via mobile apps are significantly less risky for merchants during the holiday season than at other times of the year.

“Unwrapping Holiday Fraud: Insights to Protect Your Business & Drive eCommerce Revenue”

Unwrapping Holiday Fraud: Insights to Protect Your Business & Drive eCommerce Revenue emphasizes that shopping behaviors during the holiday season are different than during the rest of the year – and not just in terms of volume. It explains that consumer behaviors and fraud trends are not consistent throughout the year or even through the holiday season. It also divides holiday shopping into six key sub-seasons – each with its own unique considerations, and it cautions merchants against assuming that typical indicators of risk are actual fraud during the holiday season.

“eCommerce merchants traditionally have their busiest days of the year during Cyber Weekend,” said Eyal Raab, vice president of sales and business development at Riskified. “This short period may constitute as much as 6% of their annual revenues, so it can be a make or break moment. Merchants should be ready, with the know-how and systems in place to safely accept as many legitimate transactions as possible.”

International orders double during the holiday shopping season and are particularly prevalent on Cyber Weekend. While international orders are often riskier than domestic, international purchases during all holiday shopping sub-seasons are safer than at other times of the year. Merchants risk declining many good orders if they don’t take that into account.

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Gift givers around the world are out in force during Cyber Weekend, but this is also a time when many shoppers take advantage of deep discounts to make their move on items they’ve been eyeing all year. The report adds that merchants can use this as an opportunity to reduce their shipping costs by offering customers incentives to pick up their purchases in-store.

Pre-Christmas – the next Riskified-defined holiday sub-season – kicks in next week. Running from December 3 through December 23, this is the holiday sub-season with the lowest international shipping. However, volume from international customers is still 30% higher than the yearly average.

eCommerce fraud rates are highest during the Christmas sub-season, which runs December 24 and 25. However, as the Riskified report explains, that’s largely because so few legitimate shoppers are online on those two days, while fraudsters try to take advantage of fraud and customer-support teams exhausted at the end of the holiday rush.

Riskified in its report also uncovers other holiday shopping trends and gives merchants tips on how to address them. For example, while dividing an order and shipping to multiple addresses typically raises red flags for fraud, Riskified says it’s completely normal for a single shopper to send gifts to many others during the holiday season, and merchants should take that into account when evaluating the order.

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The report cautions merchants to be aware of mixed-cart fraud. This is when fraudsters purchase physical goods to be shipped to the victim’s actual address and then add digital gift cards to be sent to the fraudster’s email address. Because the order of physical goods matches normal patterns, the order may appear legitimate, Riskified explains. Unfortunately, when these orders are approved, cardholders receive items they did not order, and the fraudsters get the digital gift cards for which they did not pay.

Riskified also breaks down holiday eCommerce sales by device. It highlights that mobile app orders are a relatively safe segment during the holiday shopping season versus the rest of the year. What’s more, mobile app orders throughout all sub-seasons typically experience 70% fewer fraud attempts than they do during the rest of the year. That puts them on par with desktop orders.

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