How To Fight Fraud Effectively on Black Friday

Black Friday is typically seen as the kickoff to a busy shopping season. Consumers flood not only physical stores, but websites and apps in an effort to find the best deals.

However, while shoppers are hunting for discounts and savings, fraudsters are also hard at work. These bad actors are prepared with numerous tactics to exploit the surge in digital shopping. This greatly increased digital traffic often allows attackers to “blend in,” so to speak, and pull off successful attacks without being noticed. As one of the most popular shopping events, especially in the U.S. and U.K., Black Friday has become a prime opportunity for fraud and online abuse.

Here are some of the most common types of fraud retailers can expect to see on Black Friday, and how they can take effective steps to stop it.

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Account Takeover (ATO) Fraud

• Fraudsters often use stolen credentials to log into legitimate customer accounts. With increased holiday shopping traffic, these accounts can be used to make purchases, redeem loyalty points, or change shipping addresses. This type of fraud can be hard to detect since it comes from genuine accounts.

Fake Websites and Phishing Scams

• Fake online stores, often set up to mimic popular retail sites, trick customers into entering their payment details or purchasing fake products. Phishing emails or messages that offer “exclusive Black Friday deals” also lure shoppers to these sites, leading to both financial loss and potential identity theft.

Buy-Now-Pay-Later (BNPL) Fraud

• BNPL options are popular during Black Friday, and fraudsters exploit this by making purchases using stolen identities or fake accounts. Fraudulent BNPL purchases are difficult to recover since the transaction is split into payments, which can easily go undetected initially.

Card Testing

• Fraudsters use the holiday shopping season to test stolen card numbers. They make small purchases or attempt low-value transactions on retail sites to verify if the cards are active, planning to use the validated ones for larger fraudulent purchases elsewhere.

‍Device Emulation and IP Spoofing

• By using tools that emulate legitimate devices and spoof IP addresses, fraudsters try to evade fraud detection systems that rely on behavioral biometrics or geolocation. This helps them appear as genuine users, making it challenging for businesses to spot suspicious activity.

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How Businesses Can Stay One Step Ahead of Fraud

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Black Friday can be a boom time for online businesses, but its effect can also be muted by the effects of fraud, which damages customer relationships and results in lost revenue.  Here’s how to ensure a smooth Black Friday for consumers while rooting out fraudsters.

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Be Prepared

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Understand there will be surges in traffic to websites and apps, and ensure that your technology infrastructure is in place to handle these surges. This helps to avoid outages or slowdowns that can result in lost business, and helps detect potentially suspicious behavior. 

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Utilize Robust KYC

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Thoroughly verify user identities, which includes accurately identifying customers, appropriately assessing risk, and monitoring user activity to identify unusual or suspicious behavior and flagging it for investigation.

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Accurate Document Verification

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Fraudsters have become increasingly adept at creating genuine-looking identity documents. They do this through the use of synthetic ID’s, or by incorporating AI-powered deepfakes to create fake documents that look incredibly real. Businesses should invest in systems that can spot even the slightest alterations or forgeries on identity documents. 

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Account Monitoring

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Monitor existing users’ account activity in real time to spot suspicious in-platform activity and intervene, as needed. This could indicate whether a genuine user account has been compromised. 

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IP and Device Tracking

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Monitor IP addresses and device information to detect and flag suspicious activities. Behavioral biometrics also come into play as a way of detecting possible fraud. 

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Anti-fraud Algorithms

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Use advanced machine learning to analyze account activity, behavior and detect patterns that might seem risky. 

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Conclusion

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As the holiday shopping season approaches, both retailers and consumers need to be vigilant. While Black Friday offers unparalleled opportunities for growth and savings, it also brings heightened risks. Retailers should implement robust fraud prevention measures to protect their customers and their business, and shoppers should remain cautious, verifying deals and sources. To learn more about how Caf can help your business fight fraud on Black Friday and beyond, click here. 

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