Financial Institution Tips: Protecting Customers From Holiday Card Fraud

With Halloween behind us, it's time to start thinking about what's next: The holiday rush. For banks and credit union leaders, this means thinking about the holiday card fraud rush that comes along with the increased card spend activity.

With more holiday shopping taking place online, CNP fraud continues to rise. E-commerce, or CNP, fraud is 81 percent more likely to occur than in-store, or card-present fraud. As seen every holiday season, we anticipate a surge in fraud this year. The holiday season is also a busy time for fraudsters who prey on financial institutions who are reluctant to decline a transaction or re-issue cards in order to lessen customer impact.

Being prepared to combat holiday card fraud means proactively preparing long before the storm hits. As a refresher for 2019, we’ve brought back our team’s tips on what issuers can do to manage incidents during this peak fraud.

Bank and credit union leaders must educate cardholders on making safe purchases and monitoring their cards frequently. For financial institutions, it’s important to implement real-time monitoring for fraudulent or unusual patterns, increase customer interactions, and minimize re-issuance disturbance. After the holiday season, issuers should follow-up with fraud transactions and compromised card analysis in order to perform a more targeted, efficient re-issuance process. Following the holiday season, FIs should determine where gaps exist by investing in better and faster technology tools. 

Throughout the year, issuers must prepare for updated decision rules, have a strategic plan for why and when they reissue cards, and have the tools to tweak KYC and ID fraud algorithms to keep up with the speed fraudsters evolve. After the holiday season, issuers should be prepared to follow-up with fraud transactions and compromised card analysis in order to perform a more targeted, efficient re-issuance process. Following the holiday season, FIs should determine where gaps exist by investing in better and faster technology tools.

But what about before the holiday fraud surge hits?  Issuers must educate cardholders on making safe purchases and monitoring their cards frequently. For FIs, it’s important to implement real-time monitoring for fraudulent or unusual patterns, increase customer interactions, and minimize re-issuance disturbance. 

Rising trends like synthetic ID fraud and account takeover fraud will continue to lead the list of concerns. Issuers should invest in technology that allows them to proactively detect compromises card  fraud — and the source of data breaches — better and more accurately in order to stop fraud faster, save money and lessen customer impact.

The holidays present a key challenge for FIs: How to balance keeping your customer’s protected with a desire to keeping a card at top of wallet. Here are a few recommendations from our team:

• Educate Cardholders about making safer online purchases, encourage them to regularly check statements, setup alert sign-ups and educate customers about common fraud schemes.
• Monitor Fraud in Real-Time on a daily and weekly to receive timeline alerts of compromises cards, This helps your team stop the spread for card fraud faster — while managing customer impact. 
• Don’t rely Exclusively on Network Alerts. By the time these alerts have been issued, 70% of fraud has already occurred. Rely in tools that can target smaller local breaches to get comprehensive protection.
• Re-Issue Smarter with Alerts or After a Clear Pattern is Identified  so your organization does not decline legitimate transactions. FIs should focus on their customers first and analyze data after the holidays with better, faster tools.