Fraud Orchestration Offers Merchants Extra Lines of Defense During Peak Sales Seasons

Time to think beyond Black Friday.

Conventional wisdom holds that peak selling season is tied to the holidays — stretching from Thanksgiving to New Year’s.

Amid the great digital shift, as merchants across the globe embrace eCommerce, the reality is far different. Amanda Mickleburgh, product director for fraud at ACI Worldwide, told PYMNTS that peak seasons are now occurring earlier in the year, even several times a year for some merchants.

By way of example, the summer months can represent a peak for travel firms (although pent-up demand is lasting into the fall), while DIY and home improvement companies can see summer and Easter surges.

But there are newer considerations in the mix, said Mickleburgh. Inflation is a real and pressing concern, and consumers are cautious about not overspending — which means potentially an overall reduction in consumer spend. Consumers are likely to plan and buy what they need even earlier than usual. For merchants, capturing this mind and wallet share boils down not just to having the right promotions in place, but also offering a broad range of payments choice to end consumers, including buy now, pay later (BNPL).

“Starting early in these efforts could be the best way to capture that spend,” Mickleburgh told PYMNTS.

Offering the broadest range of payment types will be critical in an inflationary environment and amid rising rates. And the jury’s still out as to whether merchants will have to take margin hits amid their own rising input costs or if they will be able to pass on those costs to the consumers by way of increased pricing.

Guarding Against Friendly Fraud

But no matter where the spending takes place, no matter what goods and services are bought, and regardless of when the transactions take place, we’re guaranteed to see a rise in fraud, she said.

“Fraud is generally aligned with any new payments innovations or economic uncertainty,” Mickleburgh said.

Among the avenues of attack pretty much guaranteed to surge, according to Mickleburgh: friendly fraud. Friendly fraud occurs when a cardholder makes a purchase and then takes up a dispute with their bank. They may claim that their legitimately purchased goods either didn’t turn up or were broken when they arrived — all in a bid to get the banks to charge back those transactions.

“The advice we would give to our merchants leading up to peak selling season is to make sure that they have compelling evidence that can help those firms challenge first-party fraud,” she said.

She pointed to recent Visa CE3.0 regulation that allows merchants to submit that evidence — which includes proof of delivery, IP geolocation and other information — that in turn can spur card issuers to return to cardholders and decline those attempted chargebacks.

Fraud Orchestration

But beyond the confines of friendly fraud, there will be no shortage of bot attacks, of synthetic IDs and other innovations leveraged by fraudsters to steal money and cheat consumers, merchants and banks alike.

A fraud orchestration strategy can provide an effective line of defense, she said.

“What fraud orchestration does for a merchant irrespective of the sector they’re in is offer co-convenience and efficiency,” she said.

That convenience is derived from a single point of connection, through a single application programming interface (API) that offers the enterprise the ability to take advantage of multiple tools and technologies — conducting an automatic “real-time screen” of the payment transaction data to identify fraudulent transactions and set them apart from genuine transactions. That bifurcation can have the positive ripple effect of minimizing false positives, which helps merchants maximize revenues.

Those advanced technologies can include self-learning artificial intelligence (AI) machine models, fraud scoring, community network data, IP geolocation, device ID, email validation and other information on a mix and match basis that makes sure the merchant community is using the “right” tools for the job of fraud prevention.

“There are a number of different options,” she said, so that merchants can “tailor and align the fraud strategy to the payment orchestration strategy being used and/or the experience they are trying to create for that customer.”

It’s a way of certifying a tailored approach that focuses on ensuring revenues are maximized, fraud is minimized and costs are kept low, while guaranteeing customers’ buying journeys are not unduly interrupted.