What Panic Buying, Black Friday Have In CommonMarch 27, 2020
These are unprecedented times — where the COVID-19 pandemic has shuttered stores and brought tens of millions of people (in the U.S. alone) indoors, where “home office” has taken on new meaning and where online commerce is now the way we buy.
The panic is also spurring people into all manner of financial activity — selling stocks, raising cash, sending money to loved ones, buying items they’d never considered before, stockpiling groceries and toilet paper.
To that end, said David Barnhardt, chief experience officer at GIACT, in an interview with Karen Webster, an explosion in online transactions, in card not present activity, has brought with it a host of challenges for companies simply trying to keep up with demand.
The volume of activity, he said, is akin to Black Friday and the holiday shopping season all at once. The frenzy is tied to people getting set up for lockdowns (or grappling with lockdowns that are already underway).
Along the way, he said, GIACT’s customers have reported a 25 percent increase in overall declines and a 15 percent increase in high-risk (likely fraudulent) declines. Those companies being inundated with declines have to figure out which transactions are legitimate — where data is entered incorrectly, mistakes are made that can be rectified — and which aren’t.
“There’s a lot of good traffic,” said Barnhardt, “and this is unbelievable volume. The problem is — just like it is when we have Black Friday — this is where the fraudsters hide.”
As Barnhardt noted, as transaction volumes spike, so does fraud.
In the simultaneous battles against bad actors and false declines, he said, GIACT has advised clients wondering what to do (some have asked if they should relax fraud strategies amid the huge spike in commerce):
“We keep saying, ‘follow the data. Look at the data that are there and make sure that everything is true and correct,’” he told Webster.
He noted that in the current environment, any number of human errors could occur, leading to what he called “first-party fraud.” Consumers may have, in a panic, grabbed an old checkbook, tried to pay with an account that is closed or may have entered the wrong data as a result of “fat fingers.” Or they may have been scrambling to protect themselves against unknown financial circumstances, perhaps by going to a payday lender for the first time.
Said Barnhardt, “there are different types of risk that are being presented to all types of businesses right now, and what really comes into play is tying an identity to a payment.”
Doing so, he said, can help a firm ascertain whether first-party fraud is in play — and the transaction should ultimately go through — or whether fraudsters are attempting account takeovers or establishing new accounts with synthetic IDs.
Understanding consumer behavior and consumer lifecycle, as well as the “digital DNA” (the unique makeup of a consumer’s…