#46 - Black Friday prep: Forget fraud, do this instead

I vividly remember my first Black Friday.

I started my fraud fighting career on September 21st 2009, when I joined PayPal as a fraud analyst.

My first three months in the role were rather unusual–they were fully dedicated to training.

But my first baptism of fire happened well before we finished our training program. Black Friday was on November 27th that year, and we were called to action.

Partially trained, with no experience, we were thrust into the front lines. The company needed every warm body it could muster to manage the operational load.

Since Friday is part of the weekend in Israel (where I was based at the time), it really felt like an emergency.

For 8 hours straight I was reviewing suspicious accounts and deciding which were fraudulent and which were safe.

That day I hit my all-time record high - 158 reviewed accounts in one day. That’s a three-minute average investigation per account, without counting any breaks.

In real time, it felt like a cool experience. It felt like I was doing something important (I wasn’t), and it was exhilarating to enact my decisions in real life for the first time.

But it also taught me something important that stuck with me to this day:

Black Friday is all about letting legitimate customers place payments with minimum friction.

It is NOT about stopping fraud.

What people get wrong about Black Friday

Black Friday–and Cyber Monday, and Black Friday Week, and Q4 in general–is the culmination point of the year for many businesses. Especially merchants, but also the fintechs that support them.

Some businesses take months to prepare for that weekend alone.

And as they build and prepare for it, they also get nervous:

“What if fraudsters took advantage of my lowered prices, of the fact there’s increased customer flow, of my team being overwhelmed, of it being the weekend?”

I get it. It’s easy to get caught in “what if” scenarios when you plan the most important weekend of your business.

But here’s the thing:

1. Fraudsters don’t care about better prices. It’s not their money anyway.

2. Fraudsters know that payment fraud prevention is largely automated.

3. There are no substantial reports of fraudsters taking advantage of the BF/CM weekend to “blend” in the crowd.

For fraudsters, Black Friday is just another day at work. Fraud attempt numbers are usually the same. 

In fact, because they remain constant while the general flow increases, most businesses see a decrease in their fraud rate during this time.

So, does that mean that Black Friday is an ordinary day for fraud teams as well?

No. They need to deal with a different problem–their real customers.

The fraud bizarro world

Fraud prevention systems are fine-tuned to separate good customers from bad ones based on differences in how they behave.

That’s no easy feat, especially in CNP payments, where the behavioral data can be rather slim.

During the BF/CM weekend, we spot changes in legitimate buying behavior:

1. Higher overall spend

2. Placing multiple transactions in a short period of time

3. Heavier focus on high-value, giftable items (that can also be resold)

Sounds familiar? Yes, that’s exactly what fraudsters do as well!

Now couple that with the fact that the merchants themselves might change their behavior:

1. Pop-up stores in new locations

2. Selling new items / pricing brackets

3. Bigger VT / MOTO flows with lower data quality

Black Friday creates a bizarro world for fraud teams: it's the one day a year when legitimate customers behave like fraudsters.

Velocity checks trigger all over the place.

ML model scores suddenly spike.

Both consumers and merchants are doing their best to get caught by a dormant rule everyone forgot about.

And this is a bigger threat than fraudsters attacking you. Left unchecked, you might come back from the weekend only to find out your risk system blocked most of your expected gains.

Expecting the unexpected

How do we prepare for this eventuality? How do we make sure our system doesn’t go haywire?

The truth is, we cannot expect to foresee what would go wrong.

Black Friday reveals that both consumers and merchants can be as creative as fraudsters.

So the trick is not to recalibrate your velocity thresholds or model scoring. It’s all about preparing to react swiftly to any problems that may come up.

Here are the principles that guided me and my teams over the course of my career.

Starting with the night before BF and up until BF week ends, the team is on emergency mode. This means a few things:

Extended Business Hours

• Split the team into early and late shifts to cover at least 12-hour business days

• Weekend monitoring during the same shifts with at least one person actively online

• Pause all big projects and/or releases

• Frequent internal reports to leadership (2 x day), even if just to say “all systems green”

On-call duty

• Establish off-business-hours alerts focused on approval rates and technical errors

• Create multi-tier on-call rotations (1st-line and 2nd-line)

• Include client-facing leadership in on-call shifts in case there are severe incidents

External lines of communication

• Inform your partners and/or merchants in advance about your preparations

• Consider opening dedicated support lines and escalation paths for critical B2B clients/partners

Needless to say, this takes a lot out of the team and it introduces work schedules and concepts that might be foreign to your organization.

It’s a delicate matter, and my advice is to be fair and overcompensate the team members. Especially if this is the “make or break” period of your business.

Got additional questions? Or maybe horror stories from your Black Friday records? Hit the reply button and share with me!

In the meantime, that’s all for this week.

See you next Saturday.

P.S. If you feel like you're running out of time and need some expert advice with getting your fraud strategy on track, here's how I can help you:

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