Consumers are projected to spend $240.8 billion online between November 1 – December 31 this year, an increase of 8.4% from last year’s holiday season. Some retailers are taking note and getting a head start by advertising their pre-Black Friday (and upcoming Black Friday) sales to maximize their share of the pie.  

But amid all the holiday cheer is some not-so-great news: Retailers face a number of challenges, such as ensuring there’s enough inventory to meet demand and running successful ad campaigns to catch shoppers’ attention (and money). And with online payment fraud losses predicted to be over $343 billion overall between 2023 and 2027, merchants also need to protect themselves and their customers from fraudulent activity as scammers step up their tactics to exploit online transactions.   

In this article, we cover what online retailers can do to reduce fraud and improve conversion rates this holiday shopping season. 

Optimize your checkout for mobile devices 

Of the $240.8 billion projected to be spent online this holiday season, purchases made using mobile devices is estimated to be $128.1 billion. 

With those numbers, retailers should ensure their websites are mobile-friendly and that their checkout flow is optimized for mobile devices — both to provide a smooth experience for customers and also for fraud detection and prevention. For example, since the mobile user experience for checkout can dramatically differ from that in a web browser, it’s worth reviewing to ensure form fields and other functionality works as expected.

At the same time, retailers should test their fraud detection capabilities. For example, are you able to identify devices that have used stolen credit cards in previous transactions or that are tied to multiple accounts with different addresses? Using a device intelligence solution to recognize such devices can help prevent fraud and protect your customers at the same time. 

Reduce credit card fraud card-not-present, return & chargeback fraud

Credit card fraud commonly includes card-not-present transactions, along with return fraud and chargebacks, all of which can quickly add up to a significant amount of money for online retailers. On top of that, retailers that have too many chargebacks over a short period of time can be slapped with fines and penalties levied by banks. In worst-case scenarios, merchants may even have their accounts closed altogether so they no longer can accept credit card payments, dealing a massive blow to their bottom line. 

To avoid penalties and fines related to credit card fraud, online merchants should follow several best practices, including: 

• Capturing a customer’s IP address 
• Verifying a credit card’s CVV code 
• Collecting customer information, such as email and billing addresses, and phone numbers
• Following data protection practices, such as using SSL on payment pages
• Flagging unusual transaction behaviors, such as multiple customers visiting from the same IP address or a large number of chargeback requests from one region
• Accurately identifying new and returning visitors to your website, so you can automatically trigger extra authentication for new logins 

Lock down your promotional codes to cut down on abuse and fraud

Shoppers regularly look for the best deal and will search around the internet (or get help from sites like Honey) to find valid promo codes for sites. If retailers are concerned about visitors using discount codes they shouldn’t be using, here are a few options to help prevent promo abuse:

• Provide a promo code via a banner on your site or through newsletter signup (e.g., “welcome10”)
• Ensure promotional codes are only used when and how you intend by enforcing expiration dates, user logins, or purchase requirements (e.g., “welcome10” is only available for the first 7 days after email newsletter signup, on the first purchase, and for full-price products only)
• Implement visitor identification methods to detect users using multiple email addresses or more to take advantage of promo codes (e.g., “welcome10” is used by one device using multiple emails to make multiple purchases)

Protect your revenue with shipping protection solutions

A virtual paper trail of shipments helps reduce credit card chargebacks and fraudulent refund requests. For example, a customer may try to initiate a chargeback on a credit card if they don’t receive their purchase within an expected time frame, even if the package is on its way.

Retailers can help prevent chargebacks and fraud from occurring during shipping and delivery in a few ways, including:

• Clearly stating the expected package delivery date and provide a tracking number for all deliveries 
• Checking shipped orders regularly for issues or anomalies, such as outstanding deliveries
• Building standard customer communication processes and outlining it in writing on the website for situations where a package gets delayed, lost, damaged in transit, or returned 
• Implementing a third-party provider, like Route, for shipping protection that helps the business and the consumer in case anything is lost, stolen, or damaged during transit

Key takeaways for detecting + preventing payment fraud during the holiday season

Many options are available to detect and prevent fraudulent online transactions. At a minimum, online retailers should have systems that raise alerts when unusual behavior occurs — for example, high-value purchases, multiple orders, or failed transaction attempts within a short time are tell-tale signs of fraud. 

Learn more about how Fingerprint’s device intelligence technology can help online retailers identify suspicious behavior patterns by flagging visitors with a history of fraudulent transactions — even if they are in incognito mode — to protect their customers, their revenue, and their brand reputation.