Fighting Holiday Fraud: Lessons from Black Friday/Cyber Monday

Jan 03, 2019 | by Yael Gour

It’s a holiday tradition: shoppers descending on giant retail stores to take advantage of holiday sales on Black Friday, then retreating to their computers to shop for bargains online on Cyber Monday. Or at least we’ve come to think of it that way. In fact, the reality in 2018 was quite different. That’s based on data gathered by the RSA Fraud & Risk Intelligence data science team*, which examined how people in major regions of the world shopped during Black Friday and Cyber Monday. If you’re a retailer or a card issuer, here’s what you’ll want to be aware of, so you can be prepared going into the 2019 holiday shopping season.

Brace Yourself: More Transactions, More Fraud, More Risk
In examining 2016-2018 holiday shopping transactions, the RSA team found year-over-year growth in online transaction volumes during Black Friday and Cyber Monday. Not only did transaction volumes grow; the average transaction value did, too. For example, in the U.S., the average value of a transaction on Cyber Monday grew almost 9 percent from $209 in 2017 to $228.6 in 2018. And in addition to year-over-year growth for transactions in general, we also saw a spike in transactions on Black Friday and Cyber Monday as compared to other days of the year. 

Fraud data associated with 2018 transactions will take until late February 2019 to calculate, because case marking and chargeback data can take up to three months to update—but looking at fraud data from Black Friday and Cyber Monday of 2017, we saw a higher percentage of fraudulent transactions than on other weekdays. We can assume that fraudsters worked hard during the holiday shopping season, sparing no effort to steal funds and goods. It’s reasonable to assume, too, that card issuers were lowering their thresholds for stopping risky transactions to avoid compromising the end-user experience at a time when consumers are eager to spend.

Merchants and card issuers need to be aware of the demonstrated heightened risk of fraud during this time so that they can be prepared to combat it. They also need to be aware of what they can do at the same time to ensure consumers are able to complete their purchases without intervention. Taking steps both to prevent fraud and to provide a frictionless customer experience will make it easier to grow revenue while reducing fraud losses.

Beware: Online Shopping Peak Is Moving to Black Friday (with Fraud Likely to Follow)
While consumers did more online shopping during Black Friday and Cyber Monday than at other times of the year in 2018, it’s also interesting to note that they also did more online shopping on Black Friday than on Cyber Monday. Total transaction volume was 25 percent higher on Black Friday, upending the conventional wisdom that online shopping is more prevalent on Cyber Monday. The increased online shopping on Black Friday is likely a result of several factors: merchants starting their holidays sales early, the overall increase in online shopping and the use of mobile devices, which make online shopping even more accessible. In any case, merchants and card issuers will benefit from being prepared for an elevated risk of online shopping fraud not just on Cyber Monday, but also on Black Friday.

Be Prepared: Effective Fraud Prevention Tools Are Essential
With the trend toward a higher percentage of fraudulent transactions, merchants and card issuers looking ahead to 2019 need to be sure they’re well prepared to combat online fraud during Black Friday and Cyber Monday.

  • For merchants: Adoption of EMVCo® 3-D Secure 2.0 protocol is an important step. The updated protocol supports more channels for card-not-present (CNP) transactions, including the increasingly popular mobile channel. It also supports more robust authentication that is also less cumbersome for the consumer. With this combination of enhancements, 3-D Secure 2.0 can help merchants reduce fraud losses while offering a frictionless customer experience.
  • For card issuers: As merchant adoption of the 3-D Secure 2.0 protocol grows, card issuers need to be prepared for more transactions and the potential for more fraud. Effective fraud prevention solutions that extend across both web and mobile channels will be critical to delivering effective fraud prevention while at the same time providing convenient payments for customers.

Consumers today have more ways to do their holiday shopping than ever before, no matter where they are or whether they’re in front of a computer. As they take advantage of this convenience, we see more transactions during prime holiday shopping days—and more fraud. Merchants and card issuers that recognize this shift will be in the best position to defend against it.

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Learn more about RSA® Adaptive Authentication for eCommerce, the fraud prevention tool that protected more than 5.5 million transactions during the holiday season, helping merchants and card issuers keep online shopping safe and secure for consumers. 

*Findings based on analytics applied to transactions processed by RSA Adaptive Authentication for eCommerce 

Author: Yael Gour

Category: Research and Innovation, Blog Post

Keywords: 3-D Secure, Card Not Present Fraud, CNP, Online Shopping, Holiday Shopping, Black Friday, Card Fraud, Holiday Fraud, Holiday Shopping Fraud, RSA Fraud & Risk Intelligence Suite, RSA Adaptive Authentication