With the onset of the festivities and holidays, a spike in e-commerce shopping, digital transactions, and adoption of unsecured financial credit products (such as Buy Now Pay Later or BNPL) is expected but with a rampant increase in fraudulent activities that have the potential to adversely affect an online business. Thus, online businesses of any size can take the following measures to combat online fraud:
• Seasonally scheduled scammers do not have sophisticated technical skills and many companies manage to stop them at the stage of standard initial online verification of the application. Companies should apply a more conservative approach connected with new applications, evaluation policies, and rules, which turn out to be really useful and will save your business from possible financial losses during this period.
• Online companies should pay attention to the applications with high-risk markers - attempts of device or internet connection manipulation, as well as user’s behavior. Such measures will allow filtering out of applications coming from devices with emulators, randomizers and will be able to determine the network infrastructure of professional fraudsters. In the case of digital lending, it will help to reduce the share of excessively active borrowers who usually keep trying to apply for a large number of loans often manipulating application data (for example identity theft i.e. using application information of genuine people sometimes even known to them).
• Online companies should approach the valuation of frequency characteristics in a more conservative way. Different frequency characteristics are also a very important parameter for risk assessment in the holiday season, for example, the number of risky applications from the same device or IP address, for a limited period of time or simply for the entire observation period. Usually, the risk increases along with the frequency, since this may indicate both - the risk of credit shopping or the risk of fraud, especially if such activity is supplemented by manipulation with other data.
• Many companies may fear the risk of profit decline filtering “good” customers along with online scammers. However, in this case, a more precise adjustment of the financial product for the end-user will be of great use. By giving special offers and taking into account the needs of regular customers, the company can mitigate the situation and reduce losses caused by online fraud.