How to Prevent Refund & Return Fraud on Black Friday and Cyber Monday

Black Friday and Cyber Monday have become synonymous with unmissable sales opportunities, drawing millions of shoppers to e-commerce platforms worldwide. While these high-sales events boost revenue and brand visibility, they also create the perfect environment for fraud.

Fraud is so pervasive around this time of year that Black Friday is now sometimes referred to as “Black Fraud Day”. The discount period has become a “prime time” for scammers, according to Britain’s chief executive of the National Cyber Security Centre.

E-commerce platforms witness  a definite spike in refund and return fraud during these periods, which costs the sector billions in lost revenue and operational inefficiencies.

What is refund and return fraud?

Refund and return fraud is the practice of exploiting a merchant's policy to gain financially in illegitimate ways. In particular, return fraud happens when someone manipulates a store or business's return policies to get money, credit, or a replacement item they aren't entitled to. For example, returning a used item as "new" or using fake receipts. Refund fraud involves falsely claiming a refund without actually returning a product, or by exploiting online systems to get money back without following the proper process. This can include saying an order never arrived when it did.

In the US, several major retailers are implementing new return policies to combat an increase in fraudulent claims around the holidays. Stores like Target, for example, are reserving the right to ban the return privileges of those who abuse their policies.

While limiting return and refund privileges for serial offenders is important, there is a lot that companies can do to protect themselves against fraud before, during and after every Black Friday and Cyber Monday sales event. By adopting a proactive approach and leveraging cutting-edge technology, businesses can safeguard from fraud attacks by unknown users and protect their bottom line during the bustling holiday season.

What should e-commerce providers do before Black Friday and Cyber Monday?

To effectively combat refund and return fraud during the busiest shopping season of the year, e-commerce providers must start with robust preparation well in advance.

Analyze historic fraud data to gain insights

As a starting point, it's always recommended to analyze historical fraud data from previous years to identify chargeback patterns and refine detection systems. Fraudulent activities like wardrobing or synthetic identity usage often follow predictable trends that can inform prevention strategies. It's good practice to also prepare a black list based on multiple attributes (email addresses, phone numbers, IP location, specific device) to identify and block returning fraudsters from completing an order.

Tighten return policies

Refund fraud often exploits lenient or ambiguous return policies. Before Black Friday, businesses should review and tighten these policies to deter abuse while maintaining a positive customer experience. This can include measures such as:

• Requiring proof of purchase for all returns.
• Implementing restocking fees for certain items to discourage misuse.
• Tagging high-risk products to ensure they are returned in their original condition.

Clear communication of these policies is equally crucial. E-commerce platforms must ensure that customers are aware of return conditions upfront, which can help manage expectations and reduce opportunities for exploitation.

Educate customers and teams

Fraudsters often target both e-commerce platforms and their customers, using tactics like phishing and fake websites to steal sensitive information. To combat this, businesses are advised to educate their customers on how to identify and avoid scams. For instance, providing tips on spotting fake websites or warning against sharing personal data can go a long way in protecting customers and preserving brand trust.

Internally, training teams—particularly those in customer support—on fraud detection is essential. Frontline staff should be able to recognize red flags in return and refund requests, such as inconsistent information or unusual behaviors. Fraud detection tools like the Trustfull platform enables customer support teams to make more informed decisions, as they can access the service during calls or live chats with customers to validate identities and digital footprints in real time.

Integrate digital footprint analysis at checkout

Analyzing alternative signals on provided user details like phone numbers, email addresses, IP data, device and browser will reveal important risk factors and identify returning offenders before they can successfully complete an order during the busiest time of the year.

The process of gathering and processing information on users' digital attributes and activities is known as "digital footprint analysis". As a strategy, it ensures that every sales transaction is automatically backed by robust user verification processes able to scale even when there are spikes in order requests during the holidays.

Trustfull goes into extensive detail when gathering and interpreting digital signals like email, phone, IP, browser and device data. The resulting insights will create an entirely new defensive strategy for e-comm platforms, so they can be ready to put a stop to return and refund fraud before it even occurs.

What should e-commerce providers do during Black Friday and Cyber Monday?

As the floodgates open on Black Friday and Cyber Monday, e-commerce platforms face an overwhelming surge in transactions. While this is a golden opportunity for revenue, it’s also a prime time for fraud. Implementing robust, real-time defenses is essential to minimize losses and maintain a seamless shopping experience for genuine customers.

Monitor transactions in real time

Return fraud often peaks during these sales events due to increased purchase volumes and relaxed return policies aimed at driving customer satisfaction.

Tracking and analyzing transactions as they happen allows businesses to catch fraudulent activity before it escalates. Internal teams should look for red flags such as:

• Sudden spikes in high-value returns or refund requests.
• Transactions from high-risk locations or IP addresses.
• Discrepancies between billing and shipping addresses.
• Unusual purchase patterns, such as bulk orders of resellable items followed by refund requests.

Real-time monitoring tools powered by machine learning like Trustfull can identify these patterns and flag suspicious activities for further review. By acting promptly, businesses can prevent losses while maintaining the trust of legitimate customers.

Protect against Account Takeovers (ATO)

Account takeover (ATO) fraud is a significant threat during high-traffic events, where fraudsters gain unauthorized access to customer accounts to make fraudulent purchases or refunds. During Black Friday and Cyber Monday, the sheer volume of activity makes it easier for fraudsters to hide in plain sight.

To counter ATO attempts, e-commerce providers must monitor login behaviors for red flags, such as:

• Access from unusual locations or devices.
• Sudden changes to shipping addresses or payment details.
• Multiple failed login attempts followed by a successful one.

Trustfull’s dynamic risk scoring models excel in detecting these behaviors, providing real-time alerts to prevent fraudulent activities. Additionally, notifying customers of suspicious activity on their accounts promptly and via multiple channels is bound to enhance security and trust.

Streamline communication

Empowering customer support teams to act swiftly and accurately is a critical component of fraud prevention. During live interactions with customers, support agents can be the first line of defense in identifying and stopping fraudulent behavior.

With the Trustfull platform, customer support teams can validate identities and assess associated risks while interacting with customers in real time, whether through calls or live chats. By integrating Trustfull into their workflow, agents can make informed decisions quickly, ensuring that legitimate customers receive seamless service while fraudulent attempts are escalated for further investigation.

What should e-commerce providers do after Black Friday and Cyber Monday?

To ensure future success and safeguard against evolving fraud tactics, e-commerce providers must evaluate the outcomes of their Black Friday and Cyber Monday strategies.

Analyze fraud trends and patterns

The period following Black Friday and Cyber Monday is an invaluable time for e-commerce providers to evaluate their fraud prevention efforts. Reviewing transaction data and flagged activities can uncover critical insights into fraud patterns, helping businesses refine their strategies for the future and expand on their black list of known fraudsters.

Using Trustfull’s predictive analytics tools, businesses can identify recurring fraud tactics, such as specific emails, phone numbers or IP addresses related to refund fraud or suspicious return behaviors. This analysis not only strengthens defenses but also allows businesses to anticipate fraud trends ahead of the next sales season.

Evaluate policy effectiveness

Post-event reviews should extend to the effectiveness of return and refund policies implemented during the sales rush. Did the tightened return rules deter fraudulent claims without alienating genuine customers? Were refund requests flagged accurately, or did too many legitimate requests face unnecessary scrutiny?

Trustfull’s digital footprint analysis can assist in assessing these questions by providing detailed insights into the orders that were flagged as "high risk" before being blocked and requiring additional scrutiny. This information empowers e-commerce providers to strike a better balance between fraud prevention and customer satisfaction in the future.

Strengthen long-term defenses

Fraud tactics evolve, making it crucial for businesses to continuously enhance their defenses. After analyzing fraud incidents from the sales period, e-commerce platforms should invest in adaptive technologies that can respond to changing fraud methods.

With Trustfull’s OSINT capabilities and real-time risk scoring models, businesses can stay ahead of fraudsters and ensure long-term protection. These tools provide the flexibility needed to adapt to new threats while minimizing disruption to customer experiences.

Mitigate Black Friday return fraud with Trustfull

Black Friday and Cyber Monday represent enormous opportunities for e-commerce providers, but they also bring heightened risks of refund and return fraud.

Trustfull’s advanced identity intelligence solutions, powered by digital footprint analysis, OSINT capabilities, and real-time risk scoring, empower e-commerce providers to tackle fraud at every stage of the customer journey. These tools not only enhance fraud detection but also ensure that legitimate customers can shop without unnecessary disruptions.

As fraud tactics continue to evolve, staying vigilant and adaptive is essential. Learn how Trustfull’s solutions can help your business protect its operations and reputation during high-stakes shopping events.

Talk to our team to secure your e-commerce platform for all upcoming Black Friday and Cyber Monday events.