As the holiday season approaches, retailers are gearing up for the busiest shopping period of the year. While this brings opportunities for increased sales, it also presents heightened risks of payment fraud. Cybercriminals are particularly active during this time, exploiting the surge in transactions and the influx of seasonal staff. To safeguard your business and customers, it's crucial to implement robust fraud prevention strategies.
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Why Holiday Seasons See a Surge in Payment Fraud
The combination of increased online shopping and the influx of seasonal employees creates a perfect storm for fraud during the holidays. According to ACI Worldwide, global eCommerce transactions are expected to rise by 14% from October through December 2023, with fraud attempts growing to 3% of all transactions. Additionally, 'friendly fraud'—where customers dispute legitimate charges—accounts for 20% of all fraud threats during this period.
Common Holiday Payment Fraud Tactics to Watch For
As holiday sales ramp up, so does criminal ingenuity. Fraudsters take advantage of the seasonal surge in transactions and often lax security protocols to target businesses and consumers alike. Below are some of the most prevalent holiday payment fraud tactics to keep on your radar.
Card-not-present (CNP) Fraud
With the massive rise in online, mobile, and phone-based shopping during the holidays, card-not-present (CNP) fraud is one of the fastest-growing threats to both retailers and consumers. In a CNP transaction, the physical card is not required, making it easier for cybercriminals to use stolen payment credentials to make unauthorized purchases.
Fraudsters commonly obtain card details through phishing scams, data breaches, or malware attacks. They then use these credentials to make purchases through eCommerce sites or call centers where verification is minimal. Since retailers often prioritize speed and convenience during high-volume sales periods, authentication layers may be reduced, further enabling CNP fraud.
According to data from ACI Worldwide, fraud attempts can rise up to 3% of all transactions during the holiday season, posing a substantial risk to businesses that aren't adequately protected.
Fake Charity or Gift Card Scams
During the holidays, many consumers are in a giving spirit—making them prime targets for fake charity fraud. Scammers create convincing websites, emails, or social media posts posing as legitimate nonprofits and solicit donations using emotionally charged stories. Often, these "charities" are not registered organizations, and any funds collected go directly into the hands of fraudsters.
Gift card scams are also widespread this time of year. Fraudsters may offer “too good to be true” promotions or discounts on popular gift cards or request gift cards as payment through impersonation schemes. Once a consumer purchases and shares the card numbers, the funds are virtually impossible to recover.
These scams don’t just impact consumers—they also lead to reputational damage for retailers if the scam is falsely associated with their brand or platform.
Insider Threats in Contact Centers
Retailers often expand their workforce with temporary or seasonal employees during the holidays, particularly in contact centers and customer service departments. While these hires help meet increased demand, they can also introduce insider risk.
Without proper training, seasonal staff may unknowingly mishandle sensitive customer data, leaving it vulnerable to exploitation. Worse still, malicious insiders may actively seek to steal credit card numbers, account information, or other personal data to sell on the dark web.
Given that contact centers often handle card-not-present transactions via phone, implementing stringent access controls, regular audits, and secure payment solutions is critical to mitigating insider threats. According to Sycurio, robust PCI-compliant solutions and secure voice transaction technologies can significantly reduce these risks.
How to Strengthen Your Fraud Prevention Strategy
To effectively combat holiday payment fraud, retailers must take a multi-layered, proactive approach to security. No single tactic can fully mitigate fraud risk—especially during the high-pressure holiday season when transaction volumes surge and cybercriminals become more aggressive. Instead, combining employee training, robust authentication, real-time monitoring, and secure infrastructure is key.
Educate Staff: Human error is one of the biggest security vulnerabilities in any organization. Businesses need to continually educate staff to minimize the risk of human error. This includes:
- Providing ongoing cybersecurity training for both full-time and seasonal employees.
- Teaching staff how to recognize phishing emails, social engineering attempts, and suspicious customer interactions.
- Implementing clear protocols for how to securely process payments, especially in contact centers or customer service departments.
Well-informed employees serve as the first line of defense against fraud and can greatly reduce the likelihood of data exposure.
Implement Strong Authentication: Multi-factor authentication (MFA) is a proven method for preventing unauthorized access. By requiring two or more forms of verification—such as a password plus a one-time code sent to a mobile device—retailers can prevent fraudsters from accessing customer or employee accounts even if one credential is compromised.
Key areas where MFA should be implemented:
- Internal systems and employee dashboards
- Customer logins for eCommerce accounts
- Remote access points for seasonal staff
Adding biometric authentication or behavioral analytics tools can further strengthen account security, especially during high-risk periods.
Monitor Transactions: Real-time transaction monitoring is crucial for spotting and stopping suspicious activity before it results in losses. Using AI and machine learning algorithms, retailers can analyze purchase patterns and flag anomalies such as:
- Sudden high-value orders
- Purchases from unfamiliar IP addresses or geolocations
- Multiple failed payment attempts
Integrating machine learning-based fraud detection into your payment systems helps you adapt quickly to evolving threats without disrupting legitimate customer activity.
Secure Payment Channels: Retailers must ensure that every point of payment interaction—online, over the phone, or in-store—is fully protected. This includes:
- Encrypting payment data during transmission and storage
- Using tokenization to replace sensitive card data with non-sensitive equivalents
- Securing call center transactions using PCI DSS-compliant voice capture technologies
According to the PCI Security Standards Council, any system that handles, stores, or transmits cardholder data must meet PCI DSS 4.0.1 standards, which emphasize risk-based authentication, advanced encryption, and secure network architecture.
Failure to secure payment channels not only increases the risk of fraud but also threatens your compliance status and can result in severe financial penalties and reputational damage.
Leveraging PCI Compliance for Holiday Readiness
Payment Card Industry Data Security Standard (PCI DSS) compliance is vital for businesses handling payment card information. It provides a comprehensive framework to protect cardholder data and prevent data breaches.
However, according to Verizon's latest findings, only 27.9% of organizations maintain full compliance with the PCI DSS requirements during their annual assessment. This reflects the global scenario, proving that most organizations struggle to achieve and maintain full PCI DSS compliance. It emphasizes the need for continuous efforts to improve security practices and increase compliance rates across industries worldwide.
Secure Payment Capture Solutions
To meet PCI DSS requirements and prevent data breaches, retailers should implement secure payment capture solutions that minimize the risk of exposing sensitive data during transaction processing.
Tokenization and encryption are two core technologies recommended by PCI DSS:
- Tokenization replaces sensitive cardholder information (like the primary account number) with a non-sensitive token that is useless to attackers. This ensures that even if data is intercepted, it cannot be used fraudulently.
- Encryption secures cardholder data during transmission, converting it into an unreadable format that can only be decrypted by an authorized recipient.
Sycurio offers PCI DSS-compliant secure payment capture tools that isolate and protect card data from the point of input. This not only reduces the risk of data breaches but also limits the scope of PCI DSS compliance—saving time, cost, and effort for internal IT and compliance teams.
By capturing payments securely across voice, web, and mobile channels, retailers can create a seamless and secure customer experience, particularly during the high-stakes holiday period.
Voice and Digital Channel Protection
Holiday shopping isn’t confined to websites—many consumers interact with brands through phone calls, live chat, messaging apps, and email. Every one of these channels presents a potential entry point for fraudsters unless they’re properly secured.
PCI DSS 4.0.1 places increased emphasis on omnichannel security, recognizing that modern consumers engage across multiple platforms. Retailers must ensure:
- Voice transactions are protected through dual-tone multi-frequency (DTMF) masking, speech recognition sanitization, or IVR systems that keep payment data away from contact center agents.
- Live chat and messaging are encrypted end-to-end, with secure authentication protocols in place.
- Email communication avoids transmitting unencrypted payment details and uses secure document links or tokenized payment portals instead.
Sycurio's solutions provide channel-agnostic protection, allowing retailers to securely collect payments across digital and voice channels while keeping sensitive data out of scope for contact center systems. This dramatically reduces risk, ensures PCI compliance, and protects brand integrity during the holidays.
How Sycurio Helps Prevent Seasonal Payment Fraud
Sycurio offers a suite of PCI DSS-compliant solutions designed to secure payment transactions across various channels. Their technologies, including tokenization and encryption, ensure that sensitive data is protected throughout the payment process. By integrating Sycurio's solutions, retailers can enhance their fraud prevention strategies and maintain customer trust during the holiday season.
Conclusion
The holiday season presents both opportunities and challenges for retailers. By proactively implementing robust fraud prevention measures and leveraging trusted solutions like Sycurio, businesses can protect themselves and their customers from the increasing threat of payment fraud.
FAQs
Why is payment fraud more common during the holidays?
The surge in online shopping, combined with the influx of seasonal employees, provides fraudsters with more opportunities to exploit vulnerabilities in payment systems.
What are the most common holiday payment scams?
Card-not-present fraud, fake charity scams, and insider threats in contact centers are prevalent during the holiday season.
How can retailers protect customers from payment fraud?
By educating staff, implementing strong authentication methods, monitoring transactions, and securing payment channels, retailers can significantly reduce the risk of fraud.
What tools help prevent holiday payment fraud?
Tools such as multi-factor authentication, real-time transaction monitoring, and secure payment capture solutions are effective in preventing fraud.
Is PCI compliance enough to prevent holiday fraud?
While PCI compliance is essential, it should be part of a broader, multi-layered security strategy that includes staff training and advanced fraud detection technologies.