Impulse shopping, scammers dominate holiday shopping
Impulse buying will be the hallmark of the 2021 holiday shopping season.
Supply chain grunts mean we’re all on the hunt for what we want – maybe even need – to fill carts online, with increasing urgency, and perhaps panic. After all, that Xbox, that Lego set, that sweater that would be perfect for that wayward uncle won’t wait forever.
As Featurespace Founder Dave Excel PYMNTS’s Karen Webster said, the traditional increase in spending over the holidays could prove to be particularly lucrative for fraudsters this year, as bad actors have the technical tools to set up fake online storefronts promising coveted products are in stock. They’ll grab consumers’ card payment (or even sensitive data) and run away with the money, then quickly shut down the store.
Consumers are overflowing with cash in the bank, supported in part by stimulus payments and other cash outflows, and they are shopping more than ever through online channels. PYMNTS’s own research shows that 87% of U.S. consumers plan to shop online during the holiday season, up from 77% last year, and at least 50% of those people will start shopping before Thanksgiving.
Read more: 87% of consumers will buy Christmas gifts online, half will start before Thanksgiving
Excell said of the holiday shopping mindset in 2021: âIf there’s a deal there, I have to go get it or else I’m going to miss something. And it’s a perfect storm for crooks.
The rush to trade and fraud attempts, he predicted, will become more pronounced during Black Friday and Cyber ââMonday for retailers – and last-minute purchases will only compound the risk.
Gift cards and prepaid cards can seem like a simple solution – click, buy, or take your chances so that the item you’re paying for doesn’t arrive. But Excell said they are a particular point of vulnerability this season as well-meaning consumers send them in instead of out-of-print items. And gift cards extend the holiday season for consumers and fraudsters alike.
The ripple effect – and it is negative – will spill over into the entire trading ecosystem.
Legitimate merchants lose the sale, consumers lose money, and banks and issuers are trapped in litigation and chargebacks, costing time and money. The cardholder must provide information to the bank and prove that the goods ordered (and paid for) never reached their destination. The dispute resolution process then involves determining whether a legitimate merchant has the funds on hand to return to the consumer – or whether the bank itself should foot the bill.
Scams are brazen, Excell noted. In an attempt to steal data and money, scammers can go so far as to send notifications that the delivery has failed and that the “details” of the order need to be re-entered. In other cases, they’ve created sites that look like trusted retail brands in an attempt to entice unwitting shoppers into transactions.
âThere may even be ‘sub’ sites,â he told Webster, that give users the ability to ‘skip the line and buy that Xbox – but all you have to do is to do is to transmit sensitive information “.
Excell noted that there is a lot of work to be done upstream as financial institutions (including acquirers) seek to validate legitimate businesses. Otherwise, he said, âWe have a lot of cleaning up to do later as an industry. “
Too often there is a rush to onboard new traders in order to capture their trades, he said.
The proactive approach
Amid the holiday rush, Excell said, banks and merchants can work to educate consumers – letting them know that if a deal sounds too good to be true, it almost certainly is.
Proactive outreach can also build loyalty among consumers and the brands they already use in day-to-day commerce, without taking the plunge to unfamiliar sites. He said merchants should strive “to help consumers stay alert by spotting scams and being able to make that ‘comparison’ between the site they are looking to buy from and where they are. this brand, their loyalty and their reputation. where they have shopped before.
Going a bit deeper into the proactive approaches that can take place behind the scenes, Excell said that increased due diligence on the part of acquirers can eliminate the avenues that allow fraudsters to set up bogus businesses to deceive banks and consumers. This may include examining the domain names of sites and how long those domain names have been registered – and even if the sites have reused logos and verbiage to mimic other well-known sites.
A proactive approach is also essential in alerting consumers to what is legitimate, Excell said – for example, in the case of a foreign merchant who needs payment to go through customs and ship a gift to the United States. A cautious consumer might think that such an alert is a scam, completely missing the order, thus requiring an extra layer of reassurance. Excell said that trusted brand apps installed on users’ devices can be particularly helpful in providing reliable communication.
Of course, scammers use these same tactics, so as Excell said, “there is a good balance to be found for traders and financial institutions”.
According to Excell, Featurespace’s ARIC Risk Hub takes information from banking partners and credit unions and can examine and identify suspicious transactions, then specifically identify “abnormal movement spreading to new merchants, which we’ve never seen before. “. In other words, examining the money entering and leaving the ecosystem can highlight transactions that should be stopped before the proceeds reach the criminals.
Reporting the transaction may give the bank an opportunity to contact the consumer to make sure they are trying to make the payment.
And, as Excell said, âthen the bank can have a conversation with the consumer to point them to the site, which can be very different from the merchant’s. [that] the consumer thought he was buying. This is a good way to prevent fraud and ensure that the shopping experience is positive.