November is time to kick-off the holiday shopping season – with online sales volume expected to soar thanks to Black Friday and Cyber Monday. We put together a short fraud management checklist for merchants with five steps to help ensure fraud operations don’t get in the way of a great shopping experience for your customers and significant revenue for your business:



Define your holiday season goals and KPIs

During the holidays, many more good customers are looking to take advantage of the steep discounts and complete their gift shopping. Our data from last holiday season shows that despite the dramatic spike in the amount of incoming orders, online merchants did not experience an increase in fraud rates relatively to the overall sales volume. So one of the main challenges for fraud prevention and management teams is to avoid chargebacks while making sure you don’t reject good customers or negatively impact sales revenue.

Based on your business goals, past performance and challenges, focus on metrics most relevant to areas where your fraud operations need to improve. Whether your highest priority is keeping review turnaround times short, reducing the chargeback rate, or boosting the rate of approvals, remember that the customer comes first. The fierce competition and consumers’ heightened time-sensitivity mean that especially over the holidays, online retailers cannot let fraud operations get in the way of a great shopping experience.



Make sure your fraud systems and team can handle the load

The sudden, dramatic spike in incoming orders may be the biggest challenge fraud prevention and risk management teams face during the holiday season. It is imperative that orders be processed expeditiously, otherwise the backlog could have customers waiting several days for order confirmation. Setting up your fraud management systems to automatically approve legitimate transactions is the easiest way to lighten the load on your manual review team. Creating new rules and adjusting existing models to reflect the unique patterns of holiday shoppers is highly recommended.

If you don’t have a models- or rules-based fraud prevention system, you can create a batch query that runs every few hours on incoming orders. Even printing out a help-sheet that your fraud team can keep by their work stations will help ensure they don’t invest more time than necessary on easily approvable orders. Moreover, it is important to analyze your team’s capacity to ensure they can handle the projected incoming volume.



Set clear directions for manually reviewing (& declining) orders

When it comes to manual fraud review, it is common practice that only senior fraud analysts are permitted to approve extremely high value orders. Many merchants, however, allow any fraud team member to decline transactions, regardless of the order value. We highly recommend setting limits to declines. It’s best practice to have an experienced analyst review the orders that junior analysts have planned to decline. This will allow inexperienced team members to avoid false positive declines going forward, and will help ensure you don’t turn away good customers.

Also, any time an order is declined by the manual review team – they should note their reasoning within the order management system. Ensure that the customer service team, who will likely field any follow-up contact with the buyer, have access to this information. In certain cases, it may be possible to overturn the decision to decline the purchase with just a few additional pieces of information.


Don’t forget to sync with marketing

Your holiday season promotions and ad campaigns are most probably in full blast. Your marketing team wouldn’t want to invest time, effort and budgets into expanding into new markets only to have those orders declined by your fraud prevention filters or manual review team. Since marketing and advertising campaigns will affect who arrives at your site, make sure those tasked with fraud management know which markets will be targeted this holiday season and what sales and promotions are planned.

Based on the input from marketing, fraud team shifts can be scheduled to cover peak buying time in the target markets. The terms of your holiday sales and promotions may also affect the shopping cart items mix, the average order value, shipping costs, and other factors that are worth taking into consideration as part of the fraud review process. Knowing where your marketing team is sharing special holiday promo codes and with whom will allow you to determine whether these codes can be considered a positive indicator.



Prepare to handle more mobile transactions

Mobile commerce now accounts for nearly one-third of all US eCommerce sales, and is expected to total $104.05 billion in 2015. In a consumer

survey about holiday shopping, 21.4% of US smartphone owners and 34.5% of tablet owners indicated they plan to purchase products using their mobile devices this holiday season. Despite the growing importance of mobile eCommerce, less than 50% of merchants surveyed in the MRC’s 2015 Global Fraud Survey track fraud separately by mobile channel.  If you are selling via mobile, we highly recommend incorporating the data unique to this channel into your fraud management systems or order review process. GPS location, mobile carrier info, and advanced behavioral analytics can all be used to inform your decisions and boost your fraud detection accuracy. Tracking fraud attempts and fraud-related chargebacks per channel (desktop vs mobile) will allow you to identify areas for improvement going forward. Preparing your fraud protocol for the 2015 holiday season may also entail updating the training for your manual review team or finding new vendors that can handle mobile specific orders.

Riskified wishes you a successful, fraud-free holiday season!
For more advice on preparing your fraud team for the holidays, download our free guide.