Risk & Fraud

Holiday Shopping and Fraud: Allow One Without the Other

By: David Ver Eecke, Sr. Fraud Product Manager
Elaborate window displays. Fragrant kitchens. And scurrying travelers. The holiday season is marked by a multitude of bustling traditions and to-do’s, but when it comes to the topic of economic verve, none are more admissible than consumer shopping.

The National Retail Federation anticipates that holiday retail sales in 2018 will increase between 4.3 and 4.8 percent compared to 2017 1. That means Americans are projected to spend a whopping $720 billion this holiday season. Additionally, ecommerce sales are predicted to increase between 17 and 22 percent2 this year, and while this may aid the economy in chugging along, it adds a new layer of complexity to card issuer responsibility.

So, here’s the real million-dollar question; in what ways will your credit union mitigate fraud risk for members while supporting their seasonal spending mirth?

If funding a fraudster’s holiday shopping list is not in your game plan, make sure a strategy from PSCU’s Risk Analytics team is.

Power Through Scoring Model Adjustments

Many risk-based scoring models make seasonal adjustments to account for increased spending during the holiday season. The scoring model adjustments, however, only go so far to alleviate unnecessary impact to the member experience, as the seasonal adjustments are typically intended to benefit a wide range of banks and credit unions. PSCU’s Risk Analytics team takes this approach a step further to ensure member safety, and analyzes holiday spending patterns from previous years to make the appropriate adjustments to rule strategies. This not only allows legitimate members to conduct uninterrupted transactions, it still provides protection against the fraudulent ones. By continuously monitoring rule strategies and declines, PSCU Risk Analytics is able to make adjustments on a more granular level to establish the best possible balance for members.

Credit Union Measures for Fraud Prevention and Member Satisfaction

With an uptick in shopping projected this year, now is the time to nail down your fraud-monitoring plan. PSCU’s 3D Secure Risk Analytics solution, Secure Online Transactions (SOT), is a next generation, proven solution to provide maximum protection for ecommerce transactions. Using the new Risk-Based Authentication, member enrollment or static-password entry are not required to process cardholder transactions using Verified by Visa or Mastercard Secure Code. This not only aids in a safe checkout process, it enables a frictionless member experience that’s devoid of unnecessary security checks.

You may also want to evaluate your daily limits and determine if they are still appropriate for the holiday shopping period. Remember, it won’t be uncommon for legitimate members to visit many stores in one day and make several high-dollar purchases in checking items off their holiday shopping list. This spike in activity can cause members to hit limits and experience card declines. If you want to ensure that your credit union’s card is top of wallet for members, then take the steps to adjust daily limits now and make note to reset them once the spending season subsides.

This simple advice merely scratches the surface of the vastly complex, swiftly evolving world of member security. While keeping pace with the speed of fraud may seem like a daunting endeavor, it’s important to remember that help is available in the form of flexible fraud strategies that reinforce member trust and protect credit union profitability.


1National Retail Federation | https://nrf.com/media-center/press-releases/nrf-forecasts-holiday-sales-will-increase-between-43-and-48-percent

2Deloitte |https://www2.deloitte.com/us/en/pages/about-deloitte/articles/press-releases/deloitte-2018-survey-retail-holiday-sales-to-climb.html