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The holiday season is a critical time for businesses, characterised by increased sales and customer interactions. However, alongside these opportunities, fraud and cyberattacks are on the rise as fraudsters reap the benefits of the holiday rush. The growth of e-commerce, combined with high transaction volumes and seasonal urgency, creates fertile ground for cybercriminals. Losses from global e-commerce fraud according to Mastercard, they are estimated to reach $48 billion in 2023, underscoring the urgent need for businesses to strengthen their security systems.
While the primary goal is retailers, the risks extend beyond the retail sector. During the holiday season, industries similar to hotels, logistics and even healthcare are particularly vulnerable. Increased demand for services and increasingly tight deadlines expose every kind of companies to potential fraud, operational disruptions and data breaches. Small businesses are particularly at risk, especially those whose significant a part of their revenues depend on the holiday season.
According to CyberintPhishing alerts increased by 46% last December compared to the remainder of the yr. Akamai also saw a 150% increase in phishing victims from mid-October to the end of November, showing the scale of holiday scams.
Synthetic identity fraud: a growing threat
One of the most concerning types of fraud during the holiday season is estimated to be synthetic identity fraud, which increased by 26% in the first half of 2024. ACI worldwide. This fraud occurs when criminals mix real and fabricated information to create a recent, synthetic identity. These identities are then used to open accounts or make fraudulent purchases, often remaining undetected for long periods of time. The result is significant financial losses which will take months to fully understand.
The rise of artificial intelligence has made synthetic identity fraud much more dangerous. AI-powered bots can quickly and efficiently create synthetic identities on a massive scale, and deepfake technologies – fake images, videos or voices – allow fraudsters to bypass traditional identity verification methods.
This growing problem doesn’t just affect retailers. Service industries, including finance and healthcare, are increasingly targeted by synthetic identity fraud as fraudsters seek to exploit each customer data and organizational vulnerabilities.
Real examples of holiday cyberattacks
Holiday fraud is not an abstract threat – it has real and devastating consequences. For example, on Christmas Eve 2023 The Ohio Lottery suffered a cyberattack that shut down key internal applications. While the gaming system continued to operate, disruptions to services similar to mobile money withdrawals and high-value prize redemption caused significant setbacks during one of the busiest times of the yr.
In one other incident that occurred in December 2022, Guardian media company was hit by a phishing attack that allowed ransomware to be placed on its systems. The ransomware disrupted critical functions including payroll and printing, impacting the company’s operations for several days.
These examples show that cybercriminals aren’t just targeting retailers during the holiday season – industries from healthcare to education are also at risk.
Other holiday scams targeting corporations
Scammers use a number of tactics to reap the benefits of businesses during the holiday season. The most typical scams include:
- Phishing emails: These emails often arrive in the type of customer inquiries, shipping notifications, or donation requests, tricking employees into clicking malicious links or sharing sensitive information.
- Fake invoice fraud: Criminals send fake invoices for goods or services, hoping that in the holiday rush, entrepreneurs pays without verifying their authenticity.
- Gift card fraud: Fraudsters impersonate company executives or business partners and ask employees to purchase gift cards by providing the fraudsters with card details.
- Overpayment fraud: Fraudsters overpay for products or services and then demand a refund before the original payment is reversed, leaving the business without funds.
These frauds may end up in significant financial losses and operational disruption, affecting not only retailers but businesses across all sectors.
How corporations can defend themselves against holiday fraud
To protect against the heightened risk of holiday fraud, corporations must adopt a multi-layered defense strategy. Here are some key steps:
- Employee training and awareness
Education is the first line of defense. Regular training sessions should teach employees how to recognize phishing emails, suspicious payment requests, and other common scams. Enabling employees to report any unusual situations can prevent small errors from turning into costly mistakes. - Artificial intelligence and fraud detection technology
Using AI-based fraud detection tools might help corporations analyze transactions in real time and discover unusual patterns which will indicate fraud. AI predictive modeling could be particularly helpful in distinguishing fraudulent activity from legitimate transactions without creating unnecessary friction for customers. - Enhanced security protocols
Implementing two-factor authentication (2FA) and secure payment gateways might help protect customer data. Tokenization and encryption further secure sensitive information, making it tougher for fraudsters to steal precious data. - Anti-phishing protection
Strengthening your email security with filters, multi-factor authentication, and anti-phishing software can significantly reduce the risk of phishing attacks. Additionally, ongoing training ensures employees remain vigilant, especially during the holiday season when phishing attempts increase. - Insurance
Insurance, particularly cyber insurance, can provide crucial financial protection in the event of a cyberattack or data breach. These policies often cover losses related to data theft, system disruptions and fraudulent activities. However, corporations should fastidiously review their insurance policies to understand what risks are covered, including fraud similar to phishing or synthetic identity fraud. Many standard policies contain exceptions for certain kinds of fraud, which suggests corporations might not be fully protected.
In this case, internal insurance could also be helpful. Captive insurance allows corporations to tailor their policies to cover risks that might not be covered by standard insurance. By filling the gaps in traditional insurance policies, entrepreneurs gain more comprehensive protection and peace of mind. - Regular security audits
Regular security audits, especially before the holiday season, might help corporations discover vulnerabilities in their systems. This proactive approach allows for rapid patching and ensures cybersecurity measures are up to date.
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The holiday season offers businesses enormous opportunities, but also exposes them to significant risks. The right combination of vigilance, technology and insurance will help businesses protect against financial loss and operational disruption, ensuring a safer and successful holiday season.
Fraudsters are always improving their methods, especially through artificial intelligence scams. Staying ahead of those threats requires not only awareness, but also appropriate tools and strategies to protect against a wide selection of risks specific to holidays.