Mine your order data during the holiday season for the fraud prevention insights you need all year round

With both Black Friday and Cyber Monday in recent memory, it may seem premature to prepare for your post-holiday shopping season right now. After all, since you’re (hopefully) swamped with orders, it’s probably taking all your mental bandwidth to fulfill and ship all that merchandise.

Yet just as quickly as it came, the surge will end, leaving you not only very much in the black, but also with plenty of fresh data to use all year round. There’s the obvious cache, like new email addresses for year-round targeted marketing, and the browsing and order history to feed your site’s recommendation engine.

There’s also one more set of data that can be just as valuable to you, but is often overlooked: the data pertaining to card not present (CNP) fraud. This data’s value stems from its ability to guide you into making smarter fraud filtering decisions at this, and all other times of the year – decisions which can increase revenue while at the same time minimizing losses due to chargebacks. These aren’t trivial losses, either – chargebacksare costly, which is why many etailers are switching to fraud prevention platforms that include a chargeback protection guarantee. Why pay for the mistakes your vendor makes?

False declines are worse than fruitcake

Before we proceed, let’s dispel one ecommerce fraud myth you’ve probably heard – that CNP fraud rates increase during the holiday shopping season. The truth is that they actually decreasedue to the fact that the huge influx of legitimate shoppers during this time effectively dilutes the already small share of fraudulent orders. With these diminished fraud rates, online merchants are much more likely to falsely decline a legitimate order than correctly decline a fraudulent one.

And every legit customer turned down is a legit customer lost, because shoppers who have been mistaken for fraudsters by overly strict fraud filters are very unlikely to give that etailer another chance to win their business.

Let’s not forget, however, that one of the most effective tools for combating both false declines and criminals is already in your toolbox: your own data. The post-holiday season is an excellent time to review and analyze all of your declined orders while your fraud team can shift down from high gear and the data is still fresh.

One thing you should analyze right away: your approval rates during the holiday shopping season. Since fraud rates drop during that time, your approval rates should be at least as high as it was during other, less busy, times of the year. If not, then you most likely turned away plenty of good customers during the holidays.

Ask yourself why you declined them. Review those declined orders by categories such as order value, country, or device (i.e. desktop or mobile) and see if there are any other sources of data you can enrich your order info with to get a more complete picture of the story behind the order. For example, if a good chunk of your rejected orders were declined due to a mismatch between the shipping and billing address, linking the name on the order to both addresses via public records and social media could legitimately explain the discrepancy, allowing you to safely approve that order and collect the revenue.

Chargeback data: turn a problem into an opportunity

You should also take the time to dig a little deeper. Take the orders which resulted in chargebacks and group them by reason code. Out of those orders which resulted in chargebacks of the “unauthorized card usage” type, try to find the patterns and common data points they share, then take those insights and feed them back into your fraud prevention policies and analyst training.

New automated fraud-prevention platforms based on machine learning will do this automatically, and in real-time, so that the insights gained from your continuous stream of order data can improve not only next year’s holiday revenue, but this one’s as well. As a bonus, many of these also include a chargeback protection guarantee as we mentioned above.

The slowdown after the holiday shopping season offers not only an opportunity to tally up your yuletide treasure, but to also mine your online order data for the fraud prevention insights you need to keep the fraudster Grinches at bay, and boost your bottom line at the same time.