December is undoubtedly a magical time of year for businesses. As the holiday season rolls in, so do the crowds of eager shoppers, ready to spend their hard-earned money on gifts, decorations and other festive necessities. For many businesses, this final month of the year can be a financial boon, with sales reaching their peak.
Along with the spike in sales, however, December also sees an unfortunate increase in credit card fraud. In this article, we will explore why that is, as well as provide tips on how to safeguard your business and customers against potential threats.
December can be a time of great prosperity for businesses, but it’s essential to remain vigilant and proactive in protecting your business and customers from credit card fraud.
Why Credit Card Fraud Spikes During the Holidays
Unfortunately, where there’s an increase in sales, there’s also a rise in credit card fraud. Cybercriminals are well aware of the opportunities presented during the holiday season and become more active during this time. The reasons for the spike in credit card fraud in December include:
- Increased online shopping: With the growth of ecommerce, more people turn to online shopping during the holidays. Cybercriminals take advantage of this trend to steal credit card information during the checkout process.
- Stress and distraction: The holiday season can be hectic, causing consumers to be more distracted and less cautious when making purchases. This can make them more vulnerable to scams.
- Larger transaction volumes: The sheer volume of transactions in December provides fraudsters with more opportunities to steal and use credit card data.
- Gift card scams: Scammers often target the purchase of gift cards, which are highly attractive due to their liquidity and anonymity.
Safeguarding Your Business and Customers
To protect your business and customers during this high-risk season, consider implementing the following measures:
- Enhanced security protocols: Ensure that your payment processing system is equipped with robust security measures, including encryption, tokenization and fraud detection tools.
- Educate your staff: Train your employees to recognize potential signs of credit card fraud, such as suspicious behavior or large, unusual transactions.
- Implement two-factor authentication: Require additional verification steps for online transactions to enhance security, such as 3D Secure.
- Monitor transactions: Regularly review transaction data for anomalies and investigate any discrepancies or unusual patterns.
- Use address verification services: These systems can confirm the accuracy of billing information provided during online transactions.
- Encourage customer vigilance: Inform your customers about the risks of credit card fraud and advise them to monitor their statements regularly.
- Report suspected fraud: Work closely with law enforcement and financial institutions to report and combat fraudulent activity.
- Follow best practices: Limit access to payment systems, such as the gateway, to only employees who need it to do their job. Every employee should have their own credentials, which should be revoked if they leave the company or are terminated.
Implement Chargeback Prevention Tools
Visa and Mastercard offer tools that send alerts to businesses and provide up to 72 hours to resolve a dispute and prevent a chargeback. This can be especially useful if a business is shipping a physical product, because it provides the opportunity to stop the shipment and address the alert. For businesses that deal in digital goods and have inherently high chargebacks, there are tools that issue a refund to the cardholder in lieu of a chargeback, which helps drastically reduce chargeback ratios for some merchants by as much as 50%. In either case, be sure to take advantage of the tools available as part of your merchant account for very little or no cost, as well as value-added tools available from your preferred merchant service provider.
December can be a time of great prosperity for businesses, but it’s essential to remain vigilant and proactive in protecting your business and customers from credit card fraud. As you gear up for the holiday season, remember to prioritize security and implement best practices to ensure that your December sales are filled with genuine joy rather than the frustration of dealing with fraudsters.
Jonathan Corona has two decades of experience in the electronic payments processing industry. As chief operating officer of MobiusPay, Corona is primarily responsible for day-to-day operations as well as reviewing and advising merchants on a multitude of compliance standards mandated by the card associations, including, but not limited to, maintaining a working knowledge of BRAM guidelines and chargeback compliance rules defined in both Visa and Mastercard operating regulations.