The holiday season is a time of joy for most, but the annual spike in retail transactions makes it an attractive target for fraudsters. And with holiday ecommerce sales expected to increase by up to 4.6 percent in 2023, the problem will only grow. In fact, the average number of suspected digital fraud attempts between Thanksgiving and Cyber Monday in the US surged by a staggering 127% in 2022.   

Holiday-specific Messaging  

In addition to the sheer increase in transaction volume during the holidays, busy consumers – especially those looking to snag a hard-to-find item on their shopping list - are more likely to let their guard down and make purchases on suspicious websites. This makes holiday-specific customer and member education imperative. The warnings and reminders during this time don’t differ considerably from year-round communications, but for the fact that they stress slowing down, thinking critically, and remaining extra-vigilant during the holiday rush.  

Enhanced Vigilance 

Like messaging, the key to defeating the holiday season fraud is to match the increased transaction and fraud volume with increased resources. If you haven’t implemented any of the items below, you won’t get there this year, but they’re worth putting on your roadmap for 2024.  

Real-time Transaction Monitoring  

Real-time transaction monitoring is crucial for the detection of suspicious activities. Advanced machine learning algorithms can analyze transaction patterns and flag unusual or unauthorized purchases. This technology allows for prompt intervention, potentially stopping fraudulent transactions before financial damage occurs. 

Enhanced Authentication Methods 

To add an extra layer of security, banks and credit unions should consider implementing multi-factor authentication (MFA). MFA requires customers to provide two or more forms of verification before accessing their accounts, such as something they know (a password), something they have (a mobile device), or something they are (fingerprint or facial recognition). This makes it significantly more challenging for fraudsters to gain access to accounts. 

Geolocation-Based Alerts 

By tracking the physical location of a customer's card or device, banks and credit unions can send real-time alerts or temporarily block transactions outside the customer's usual geographical area. This approach helps prevent unauthorized transactions, especially when cards are used in distant or unusual locations. 

Collaboration and Information Sharing 

When it comes to the ever-evolving landscape of card fraud, information sharing is paramount. Banks and credit unions must collaborate with industry peers, law enforcement, and regulatory bodies to share intelligence. Sharing knowledge about the latest threats and fraud patterns allows financial institutions to proactively adapt their security measures and prevent potential breaches. 

Enhanced Encryption and Secure Processing 

Data breaches often occur at the point of sale or during online transactions. To safeguard customer data, banks, and credit unions should use advanced encryption technologies and secure processing protocols that reduce the likelihood of sensitive information falling into the wrong hands. 

Customer-Driven Controls 

Empowering customers to have control over their accounts can be an effective prevention strategy. Banks and credit unions can allow customers to set transaction limits, disable international transactions, or even freeze their cards temporarily through mobile apps. Giving customers the tools to manage their own security can mitigate potential risks. 

Regular Security Audits and Updates 

Maintaining a robust security system requires constant vigilance. Regular security audits and system updates are essential to keep up with the evolving tactics of fraudsters. Banks and credit unions should conduct regular vulnerability assessments and patch any security flaws promptly. 

In an age where our financial data is constantly under threat – and in a season where that threat increases – much of the responsibility of safeguarding it falls on the shoulders of financial. Through technology and watchfulness, credit unions and community banks can ensure that the holiday season remains a time of joy, unburdened by the financial distress wrought by fraudsters. If you're seeking assistance in keeping your members secure during this holiday season and beyond, don't hesitate to get in touch with us!

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