Black Friday and Cyber Monday (BFCM) are just around the corner. And merchants have been working hard to prepare for the largest online spending day of the year.

In 2021 alone, customers in the US spent $10.90 billion on Cyber Monday and another $9.03 billion on Black Friday. Of course, merchants hope to cash in on any additional traffic that BFCM will bring to their e-commerce site.

But, while more traffic often brings more revenue, it also leads to increased rates of fraud.

That is part of the reason that e-commerce fraud spikes dramatically during the holiday months.

In this article, we explain why it is so important for merchants to be prepared to protect themselves during BFCM season.

Hard work should pay off

Many e-commerce merchants work hard to make big changes in advance of BFCM.

Some give a total facelift to their online shops. Others focus on streamlining their operations. Almost all offer special deals to their customers.

The primary goal of these changes is to acquire new customers. And if a merchant makes a good first impression during BFCM, then these customers could remain loyal throughout the year.

Of course, it goes the other way too. One declined transaction on BFCM can have a rippling effect on the lifetime value of a customer. And businesses with a high customer lifetime value are able to grow more over time.

This is why merchants must be sure they do not wrongfully decline even a single valid transaction.

Increased fraud risk

Merchants must balance ensuring that no valid transactions are declined on BFCM with the increased risk of fraudulent behavior during this period.

Fraudsters know that merchants are overwhelmed with traffic and volume. That means merchants have less time to properly screen their transactions.

Using this knowledge, fraudsters hide their schemes within increased BFCM commerce traffic.

But, there is another way that merchants are left vulnerable by the chaos of BFCM.

Chargeback requests

When merchants are processing a high number of orders, it often causes a dip in available inventory. This can mean delayed delivery times for BFCM customers.

Customers agree to these amended terms at the checkout. But, with lots of orders, there are also lots of opportunities for confusion surrounding these terms. And while waiting for their orders to arrive, some customers may initiate chargeback requests.

This is an instance of friendly fraud, but that doesn’t mean merchants should take it lightly.

In fact, illegitimate chargeback claims like this can cost merchants double the transaction amount. And those customers who commit friendly fraud once are nine times more likely to do it again.

Be ready for Black Friday, Cyber Monday

E-commerce merchants must be wary of accidentally declining valid customers. They also must deal with the increased rate of fraudulent traffic hidden in their traffic peak.

One way to do this is by employing solutions that monitor relevant customer information. If an initial purchase is characteristic of the customer’s usual purchasing behavior, it should be approved.

This can prevent merchants from declining legitimate customers.

But, merchants should also perform post-payment customer analysis. This includes utilizing decision points beyond the checkout.

For example, deploying a checkpoint just before shipping/delivery. Doing so ensures that other factors (like delivery delays) have not affected the quality of the initial risk analysis and opens a broader screening scope that includes multiple data points.

This allows a more educated risk assessment to be performed just before the shipping/delivery which is where the risk to the merchant actually begins.

Of course, this is a tall order for merchants who are already extra busy with BFCM sales.

Merchants can outsource this task by employing automated solutions that monitor their increased risk of fraud and defend them against illegitimate chargeback claims.

FUGU offers protection for merchants against traditional fraudsters and illegitimate chargeback claims.

The service gives merchants the ability to track payments post-checkout, which allows them to safely accept transactions they currently lose to fraud and false declines.