Black Friday-Cyber Monday is peak season for fraudsters, too

Cyber Monday will see a 100% increase in fraud attempts through bots and fake profiles, predicts SEON.

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Photo by CardMapr.nl on Unsplash

Black Friday and Cyber Monday are the busiest online shopping days of the year. Brands and retailers roll out their best offers, and shoppers are often willing to try out new sites in search of a great deal.

Amid the bustle, the reality is that bad actors are also likely to be scouring for chances to perpetrate fraud through nefarious tactics like bots and fake profiles.

“For a cybercriminal, Black Friday and Cyber Monday present the perfect opportunity to hide in a crowd and defraud customers, as well as online businesses, such as ecommerce brands and retailers,” said Jimmy Fong, chief commercial officer at fraud prevention startup SEON. “Given the commercial nature of these days, merchants inevitably see a heavy increase in transaction volumes, which often leaves customer service and fraud management teams more thinly stretched, leading to less time to manually review orders.”

SEON found a big uptick in this activity in 2021. Here's what an analysis of internal data on ecommerce merchants, online loan providers and iGaming companies showed:

Black Friday saw 26% more transactions when compared to a normal Friday, yet it saw a 57% increase in declined transaction rates, which are indicative of fraud attempts.

The threat level was even higher on Cyber Monday. Last year, there were 19.5% more transactions on that day compared to a normal Monday, but a 100.3% increase in declined transactions.

The company is predicting similar figures this year, and believes more people may turn to online fraud given the darkening economic picture. SEON reviewed more than $300 billion worth of transactions for the period in 2021, and was able to stop more than $6 billion in attempted fraud on behalf of clients.

Fong said the company’s fraud prevention system was built with the specific tactics of modern online fraud in mind.

Attacks can take a variety of forms, and “have simultaneously become increasingly sophisticated and more accessible in recent years,” Fong said.

Some of these exploit vulnerabilities to break into systems.

“In recent times, we’ve really seen a rise in virtual SIM card usage, which has serious implications for the security of online businesses,” Fong said. “These programs make it much simpler to bypass two-factor authentication systems, as well as one-time passwords and therefore facilitate fraud. Moving forward, online businesses need to be more cognizant of this threat and have protocols in place to spot it. The first step in that process is raising awareness around the subject.”

Over the last five years, there has also been a steady rise of organized bot attacks, in which software is deployed that imitates legitimate clicks or purchases, and searches for a way past authentication tools through repetition.

“Bot programs remain expensive to set up, but if built properly they can be a highly effective tool for fraud,” Fong said. “Unfortunately, as fraudsters play a constant game of cat and mouse with fraud-prevention teams, bot programs are evolving to become more complex, agile, and harder to stop, which means greater levels of protection are needed than ever before.”

Fraudsters also pay attention to shopping trends. With the rise of Buy Now, Pay Later, loan fraud saw the biggest increase out of any category of attack in 2021, leading SEON to believe that there will be another uptick this year.

SEON seeks to provide tools to combat these threats, including an industry-agnostic solution that is designed to be accessible in its free plan. It has worked with businesses ranging from Buy Now, Pay Later companies like Mokka to reduce fraud rates by 65% over four months, and supported Shopify merchants in efforts to limit chargeback fraud.

To get prepared, the first step is raising awareness that fraud levels may be elevated among the people who will be running these systems during the holiday shopping season.

“I think on an instinctive level most businesses are preparing for an increase in fraud attempts, but as our research shows, the levels that companies should expect to see are truly staggering,” Fong said. “I’d always recommend that company leaders share this information with the rest of their business, especially with the fraud prevention and customer service teams who will be on the front line of the battle.”

But given those high levels of attempts and the ability to scale attacks through bots, it can also be necessary to explore raising protection levels within the machines that facilitate shopping.

“The volume of transactions that many businesses receive during this period often renders manual processing obsolete,” Fong said. “That’s why I’d recommend any concerned businesses to urgently explore enhancing their existing systems with more comprehensive fraud prevention solutions. There are fraud prevention tools, such as ours, that can be onboarded in a matter of minutes and will start to deliver a return on investment almost immediately.”

Sometimes, investment isn’t needed to get started.

“For example, we’re now able to offer a ‘forever free’ version of our solution to businesses, which could go some way in curtailing the worst excesses of Black Friday and Cyber Monday fraud,” Fong said. “As a company, we’re committed to making fraud prevention accessible to businesses of all sizes, across practically every vertical and this launch allows us to do that. So, my final and most important recommendation would be to onboard an effective fraud prevention tool like this ahead of this busy period.”

More people are expected to shop online this year, with ecommerce projected to outpace overall retail as people jump at deals and convenience. Fraudsters will be just as quick to act when an opportunity grabs their eye.

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