Online frauds have become the real silent enemy during the peak retail seasons. Throughout Black Friday 2024, which kickstarted the year-end shopping, while consumers took advantage of irresistible deals, fraudsters also took advantage of the shopping frenzy to strike with more intensity and sophistication. According to data from Signifyd, an e-commerce fraud prevention company, categories like luxury, beauty, and fashion saw significant increases in fraud attempts.
The beauty sector saw a 43% increase in fraud attempts during the Cyber Weekend (Friday, Saturday, and Sunday), compared to last year. In fashion, fraud volumes increased on Friday, but decreased in the following days. Meanwhile, in the luxury sector, fraud attempts reached peaks of 3.5x compared to the previous year during the Black Week.
And what does this mean for e-commerce? First, that fraudsters take advantage of the spikes in e-commerce sales volumes to go unnoticed with their frauds. Second, they also capitalize on discounts to gain more advantages in fraudulent activities, and third, but perhaps most importantly, invest and diversify their fraud tools to commit fraud faster and more efficiently. For the retailer, this means that the race to identify and block these frauds has never been more urgent.
Not looking at fraud increases costs
The preparation focus for high sales seasons, such as the end of the year, begins months in advance and is an opportunity to maximize sales. However, a costly mistake is forgetting that these periods also serve as a fertile ground for fraudsters, who know that the shopping frenzy can create better opportunities for scams.
The numbers observed on Black Friday become valuable information for retailers throughout the entire year, but it takes on more significant proportions during sales peaks. For example, luxury, beauty, and fashion were the most targeted categories during Black Friday 2024, precisely because of the high value of the products and their ease of resale.
Without a proactive fraud prevention strategy, supported by tools as agile as current fraud schemes and protection guarantees, the sales boom at the end of the year can also result in a significant increase in the losses generated by fraud, not only through chargeback costs but also the administrative costs of dealing with disputes and fees involved in these processes.
The solution lies in quick intelligence: preventing before losing
With fraud networks evolving with sophisticated tactics and resources to act more quickly, protection tools need to be equally agile and intelligent. Third-generation anti-fraud solutions have led a market shift with technology based on artificial intelligence and machine learning that not only identifies fraudulent patterns but also anticipates threats before they cause harm.
“Fraud attempts throughout the high sales season show schemes that are increasingly fast, organized, and daring. Periods of high activity in e-commerce are particularly targeted by fraudsters due to a significant increase in transaction volume. The secret to maintaining profitability is to adopt a proactive and instant anti-fraud approach,” says Gabriel Vecchia, commercial director of Signifyd, a company that offers a third-generation anti-fraud solution.
Fraudsters don’t sleep
While brands focus on increasing their sales, fraudsters are ready to attack. What sets successful businesses in combating fraud apart from those facing major losses is the ability to react quickly, evolve constantly, and ensure revenue protection.
“E-commerce cannot delay or hesitate in identifying fraud; nor should it bear this responsibility alone. The proper use of technology not only provides the ability to block fraudulent attempts in real-time but also ensures that the losses caused by fraud do not affect the financial health of e-commerce; in the third generation of anti-fraud solutions, this becomes the responsibility of the provider,” Vecchia concludes.
Amid peaks of fraudulent attempts in segments with high average tickets during end-of-year sales, Signifyd reaffirms the importance of artificial intelligence as a vital tool for e-commerce businesses to protect their operations against fraud and the losses they can generate.
“Attempting fraud during peak shopping times like Christmas is like fishing in a full tank – and fraudsters know it. Our mission is to ensure that online commerce continues to grow, taking advantage of all opportunities to sell more, with the peace of mind of having guaranteed protection that effectively takes responsibility for fraud – which is only possible with the massive use of advanced technology,” concludes Vecchia.
