As we begin our transition from summer to fall, small-business owners are preparing for the most wonderful (and stressful) time of the year: the holiday shopping season. While the holidays bring with it an increase in goodwill and cheer, there can also be an increased risk of online fraud.
“There are more shoppers in general, [because it’s the] busiest time of online shopping, which brings a higher likelihood of fraud, based on percentages,” says Robert Brodie, co-founder and CTO of SUMO Heavy, a digital commerce strategy and execution firm. (Q4 has historically been big for e-commerce, according to the U.S. Department of Commerce.)
Along with possibly robbing retailers of their money, online fraud can also rob them of their time: According to CyberSource’s Online Fraud Management Benchmark Report, 42 percent of the 347 North American merchants surveyed whose e-commerce revenues are less than $5 million manually review their orders. And it takes that same group 10 minutes on average to review a suspicious order.
Be Prepared
Besides making sure your website can support the increase in e-commerce business that happens around the holidays, you should also prepare for the increase in potential fraud.
“The number-one thing a small-business owner can do to protect their business is to be educated,” Brodie says. “It's vital to understand the rules and processes of your payment processor for each type of card that you accept, as well as PayPal and other processors. Everyone who deals with orders and customers should understand those processors as well.”
You should also put solutions and policies in place that can protect your business from online fraud. “Small businesses should implement some sort of fraud mitigation platform, something like CyberSource, Signifyd [or] MaxMind,” Brodie advises. “Be sure to put a plan in place for chargebacks. Each payment processor is different, and some will protect the business owner better than others.
“[Small-business owners] should work with the the payment processor to fully resolve the issue,” Brodie continues. “Usually, the person who is affected will file formally with their credit card issuer and then it will pass through the normal process of chargeback. Having a quality fraud mitigation system in place is important—and can usually prevent fraud before it happens."
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