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Fraud During the Holidays: How to Protect Your Portfolio and Cardholders from Fraud During Holiday Shopping Season 

Protect Fraud During Holiday Shopping Season
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Holiday shopping time is here, and online sales grew 7.8% over Cyber Weekend (the five days between Thanksgiving and Cyber Monday). Total holiday sales are expected to grow 3% to 4% from 2022. More good news? Better security on websites and credit cards is  making it more difficult for thieves and scammers to steal personal information.

But the bad news is that payment card fraud trends are leaning more toward social engineering, which is simply theft through old-fashioned trickery, the kind that has existed in some form for thousands of years.

What Should Financial Institutions Do to Protect Their Cardholders and Portfolios?

When it comes to determining how to detect fraud in banking and prevent it, financial institutions and card issuers can take several steps this season.

First, they should keep watch over new (less than 30 days old) customer accounts, which are more susceptible to fraud because they do not have established transaction histories. This lack of history makes it harder to judge whether purchases are legitimate or not. ACI Worldwide data from January to September 2023 found that new accounts saw 5% higher fraud activities than existing accounts compared to 2022 and are expected to increase by another 5% this holiday season.

Be judicious with Buy Now Pay Later offerings. BNPL transactions doubled in the third quarter of 2023, rising 130% in transaction value, according to the above ACI Worldwide research. Though beloved by shoppers, BNPL is also popular with friendly fraudsters — borrowers who have no intention of repaying. Fraud efforts for BNPL transactions rose by almost 6% in the third quarter of this year compared to last year and are projected to rise another 2% over the holidays, per ACI Worldwide.

But remember, optimal payment fraud detection in banking and prevention is not just about minimizing fraud but also about maximizing the customer experience. During the holiday shopping season, it is wise to retain limits and controls over high dollar spend, especially for merchants outside the top 100 or so by volume, and exert less friction over lower dollar transactions, especially digital goods, and transactions at high-volume merchants. Issuers can typically do this by increasing the model score at which they intervene in a transaction by around 20 to 50 points.

How do Banks prevent Credit Card Frauds?

Banks prevent credit card fraud by using various security measures such as:

  • Encryption technology is utilized to protect sensitive information during transactions.
  • Banks prevent credit card fraud through security measures and advanced technologies.
  • Authentication methods are required for online purchases to verify the cardholder’s identity.
  • Customer education programs play a vital role in helping people spot and swiftly report emerging credit card fraud trends.
  • EMV chip technology is implemented to provide which is one of the best ways to add a layer of security for in-person transactions
  • Advanced holiday credit card fraud and other fraud detection systems are employed to monitor transactions for any sort of suspicious activity.

What Should You Tell Cardholders to Help Protect Them?

If you want to help your customers avoid fraud attempts and scammers, you can remind them of these tips:

1. Urgency is the enemy.

Credible online sellers have no issue giving buyers time to research their products and reviews before making decisions; they know that their online reputation speaks for itself. Scammers, on the other hand, need them to make decisions so fast that they overlook key details. They want buyers to hurry up and give them their payment information and will invent reasons for buyers to act right now, including limited time offers and threats of supplies running out. Advise customers to dodge their traps by slowing down.

2. Avoid the over-friendly social marketer.

Buyers should check their social media accounts to see what information they are making public. If sellers are chasing buyers through email or social media, encourage buyers to resist the urge to click the link from there. These kinds of links are often paths to card fraud. Most social media sites do not vet their advertisers’ legitimacy, so your customers should search for the company’s website instead. And they should also be careful of sellers on sites like Craigslist, eBay, or Facebook Marketplace.

3. Never click.

How to prevent frauds in banks? Just never click on unknown links or attachments. A stranger’s text or email is often way to introduce malware and steal personal information. A common scam is the fake package delivery notification. A text or email will direct the consumer to “claim” a package that has been delivered to the wrong place. If they click the link, it will automatically install malware or take them to a site where they are asked to enter personal information. Instead, tell your customers to contact the delivery service directly.

4. Hang up on phone ‘charity’ scammers.

Some bad actors take advantage of the holidays to tug at heartstrings with fake charity hustles. Charity fraud during the holidays does increase every year. As with most scammers, they will pressure unsuspecting consumers to make quick decisions. Remind your customers to always exercise caution when giving out any financial account information. Most legitimate nonprofits will have secure online portals for giving.

5. Too good to be true? It probably is.

Everyone loves a good deal, but if a seller is offering a popular item at half-price, they are likely to take a buyer’s money and send nothing in return. Buyers should train themselves to double-check too-good-to-be-true offers. Encourage customers to search the company online and see if the reviews match its claims before pulling out their credit cards.

In its last refresh, i2c brought the benefits of a deep learning neural network in its scoring system. Deep neural networks, which use complex mathematical models to crunch numbers, have revolutionized machine learning over the last decade or so and have significantly improved fields like image and natural language processing.

The advantage of a much more accurate algorithm is that models are better able to distinguish fraud from genuine behavior, revolutionizing how card issuers and program managers help prevent payment fraud, elevating the payment experience and giving cardholders a greater sense of security.

Here at i2c, we work hard every day to ensure that our clients and their customers receive industry-leading service — and that includes fraud mitigation. Share these tips with your cardholders and know that we wish you all a safe and happy holiday season!

To learn more about how i2c can help protect your portfolio and cardholders year-round, reach out to us at

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