Insights from a fireside conversation with Tarun Singh and Tauwfiq Wahidi, moderated by Jinendra Khobare, Head of Product Engineering at Sensfrx
The holiday season is a double-edged sword for businesses globally. It offers huge chances for making money, but it also brings the highest level of fraud. As the 2025 holiday season approaches, it is more important than ever to understand how fraud is changing.
A recent meeting of experts discussed how fraud seriously impacts businesses. They looked at ways to keep customers’ trust and the protective steps needed for companies operating with modern AI technology. The main agreement was clear: today’s fraudsters are not just technical hackers. They are highly advanced criminals who are very good at social engineering. They deeply understand how to exploit both weaknesses in systems and human psychological factors.
The Geography-Specific Nature of Fraud
One of the most important insights from the discussion is that fraud is not a one-size-fits-all challenge. Different regions face distinct fraud patterns that require tailored approaches.
North American Landscape
In North America, payment risk remains critically high. As Tarun Singh explained, policy abuse has also grown significantly, particularly around refunds and returns. The evolution is striking: “They’re not hackers any more. Those are scammers. They know how to… they know the social engineering stuff. It’s pretty easy.”
This shift means businesses are no longer just defending against technical breaches. Instead, they’re combating individuals who understand human psychology and exploit legitimate business processes.
Regional Variations Across the Globe
Understanding these regional variations is crucial for global businesses to implement effective, localised fraud prevention strategies. This ensures that businesses are not relying on a one-size-fits-all approach, which often fails against sophisticated, regionally tailored fraud schemes.
- India: WhatsApp scams have become highly prevalent, leveraging the platform’s widespread use for communication and commerce
- United States: Gift card scams dominate, exploiting the popularity of gift cards and the difficulty in tracing these transactions
- Europe and other regions: Each market presents its own unique fraud ecosystem
As Tauwfiq Wahidi noted, fraudsters operate with remarkable business acumen: “If you have scammers who understand what geography they are operating with, it’s more or less like a business for them, right? They have their demography very clear about like we’re gonna scam old people, or we’re gonna work with young people.”
This geographical understanding means that a fraud prevention strategy effective in one market may fail completely in another. Businesses must study their specific markets and adapt their defences accordingly.
Primary Fraud Schemes: Payment and Policy Risk
Based on the panel’s expertise, two fraud categories emerged as the most significant threats during the holiday season:
1. Payment Risk
Payment fraud remains the fundamental concern for most marketplaces. This encompasses:
- Unauthorised transactions using stolen payment credentials
- Fraudulent chargebacks that directly impact revenue
- Card testing schemes that exploit merchant systems
- Account takeover leading to fraudulent purchases
Payment fraud creates immediate financial losses and generates operational chaos as teams scramble to investigate and resolve disputed transactions.
Example of Payment Fraud (Unauthorised Transaction)
Assume a customer, ‘Alice,’ has her credit card details stolen via a data breach at a different company. A fraudster, ‘Bob,’ uses Alice’s stolen card number and security code to make a $500 purchase on your marketplace for a high-value electronics item. This is an unauthorised transaction using stolen payment credentials. When Alice sees the charge, she reports it to her bank. The bank then issues a chargeback to your marketplace, taking the $500 back and usually adding a chargeback fee. Your marketplace has lost the item shipped to the fraudster and now faces an immediate financial loss from the transaction amount and the associated fee. Your operations team must now spend time investigating the transaction and processing the chargeback, illustrating the operational chaos created by such fraud.
2. Policy Abuse (Refund and Return Fraud)
The second major threat is policy abuse, particularly targeting refund and return processes. Fraudsters exploit:
- Lenient return policies to obtain refunds without legitimate returns
- Warranty claims for products never purchased or already used extensively
- Serial returns that indicate organised fraud operations
- Refund manipulation through social engineering of customer service teams
As Tarun Singh emphasised, “The refund return, that is going to be one thing which you need to look at. And again, this is based on the business. What kind of business are you in and what kind of fraud has hit your platform?”
This form of fraud is particularly damaging because it results in both direct financial loss and significant operational disruption. Customer service teams become overwhelmed, inventory management suffers, and the time spent investigating fraudulent claims diverts resources from genuine customer needs. An example of policy abuse targeting the refund process is a customer purchasing an expensive electronic item, using it for a week, and then initiating a return under a “no questions asked” policy, claiming the product was defective. Upon receiving the refund, the customer keeps the used product such as a fake return or an empty box scam or returns a different, less valuable item in the original packaging (return swapping).
How Fraud Dismantles Business Operations
Fraud’s effects go well beyond direct financial loss as it disrupts operations, strains teams, and damages customer trust. The following are the main ways fraud harms a business:
- Operational strain: Customer service handles floods of disputes and compromised-account investigations; returns/return fraud complicate inventory; finance deals with chargebacks and reconciliation headaches.
- Trust erosion: Aggressive fraud controls, account breaches, or visible abuse reduce customer confidence, which is hard to rebuild.
- Rapidly changing risk: In the AI era, attackers evolve fast; defenses that worked recently can become obsolete, so continuous adaptation is essential.
The AI-Era Acceleration
In the AI era, the threat landscape evolves at unprecedented speed. A defence mechanism that proved effective last quarter may be completely obsolete today. Businesses must maintain constant vigilance and continuously adapt their strategies to stay ahead of increasingly sophisticated fraud operations.
Safeguarding Customer Trust in the Holiday Rush
Safeguarding against fraudulent activity is essential not only for preventing financial detriment but, more importantly, for preserving customer confidence throughout the crucial holiday season.
The Delicate Balance
The challenge lies in implementing robust fraud detection without creating unnecessary friction for genuine customers.
Overly aggressive measures can lead to:
- Upsetting loyal customers with mistaken fraud alerts (false declines).
- Customers leaving their shopping cart because verification is too complicated.
- Bad reviews and complaints on social media.
- Customers switching to competitors who offer a smoother shopping experience.
Too little fraud prevention results in:
- Customer accounts being hacked.
- Stolen customer and payment data.
- Damage to the platform’s reputation.
- Fines and legal trouble.
Achieving the Right Balance
Success requires:
- Understanding Your Customer Base: Know what constitutes normal behaviour for your specific user segments
- Strategic Friction Application: Apply additional verification only when risk indicators genuinely warrant it
- Transparent Communication: When additional verification is needed, explain why to maintain customer understanding
- Rapid Resolution: When fraud does occur or customers face issues, resolve them quickly and fairly
Businesses that successfully manage this balance protect both their revenue and their hard-earned reputation during the holiday season and beyond.
Practical Strategies for Holiday Season 2025
Based on the panel’s insights, here are actionable strategies businesses should implement:
1. Understand Your Specific Risk Profile
Not all fraud affects all businesses equally. Assess:
- Your geographic markets and their specific fraud patterns
- Your industry vertical’s typical fraud schemes
- Your customer demographics and their vulnerabilities
- Your product categories and their fraud susceptibility
2. Implement Geography-Specific Defences
If you operate across multiple regions, deploy flexible fraud prevention strategies that account for local patterns:
- Adjust risk thresholds based on transaction origin
- Implement region-specific verification requirements
- Monitor for locally prevalent scam types
- Partner with local payment processors who understand regional fraud
Seasonal shopping peaks and region-specific promotions can spike fraud in certain areas, so controls should tighten where holiday-driven risk rises, such as higher velocity, unusual shipping addresses, or sudden promo abuse.
3. Focus on Policy Abuse Prevention
Given the rise in refund and return fraud:
- Review and tighten return policies where appropriate
- Implement return merchandise authorization (RMA) systems
- Track serial returners and high-return-rate accounts
- Train customer service teams to recognize social engineering tactics
- Consider restocking fees for excessive returns
4. Enhance Staff Training
Since modern fraud relies heavily on social engineering:
- Educate customer service teams on common manipulation tactics
- Create clear escalation procedures for suspicious requests
- Empower staff to question unusual account changes
- Conduct regular training updates as new schemes emerge
5. Build Robust Account Monitoring
Leverage white signals effectively:
- Establish behavioural baselines for all accounts
- Implement real-time anomaly detection systems
- Monitor for sudden pattern changes in trusted accounts
- Flag account takeover indicators (password changes, new devices, location shifts)
6. Stay Agile and Informed
The threat landscape evolves constantly:
- Conduct monthly reviews of fraud patterns and prevention effectiveness
- Subscribe to industry fraud intelligence services
- Participate in merchant and industry forums to share intelligence
- Be prepared to pivot strategies when new patterns emerge
7. Layer Your Defences
Don’t rely on a single fraud prevention approach:
- Combine automated systems with human review for high-risk transactions
- Use multiple data points for risk assessment
- Implement step-up authentication for account changes
- Deploy both pre-transaction and post-transaction monitoring
The Evolution of the Fraudster
A critical theme throughout the discussion was the transformation of the fraudster profile. As Tarun Singh emphasised: “I wouldn’t like it, they’re not hackers anymore. Those are scammers.”
From Technical to Social
Modern fraudsters have shifted from technical system breaches to exploiting human psychology and business processes. They:
- Study target demographics meticulously
- Understand what triggers different customer segments emotionally
- Operate fraud operations like legitimate businesses with clear target markets
- Adapt quickly to new defences and find alternative exploitation methods
The Professionalisation of Fraud
Fraud has become increasingly organised and professional:
- Clear target segment identification (elderly, young adults, specific income brackets)
- Tailored approaches based on geographic and cultural understanding
- Sophisticated use of legitimate channels (customer service, return processes, warranty claims)
- Collaborative networks sharing successful tactics
This professionalisation means businesses can no longer rely on outdated assumptions about how fraudsters operate. Defence strategies must evolve to match this new sophistication.
Leveraging Genuine Behaviour for Fraud Detection
While identifying fraud can feel overwhelming, the panellists emphasised an encouraging approach: monitoring genuine users through white signals often proves more effective than solely focusing on fraud indicators.
What Are White Signals?
White signals are indicators of legitimate, trustworthy user behaviour. As Tauwfiq Wahidi explained: “One of the biggest white signals is your account history of what you’ve been doing with your account, are you a trusted account?”
Key White Signals to Monitor
Account History and Age
- Older accounts with consistent behaviour provide a strong trust baseline
- Long-term users with regular transaction patterns are typically genuine
- As noted in the discussion: “The older the device, the trusted the device helps a lot”
Transaction Patterns
- Consistent purchasing behaviour over time
- Regular return rates that align with platform averages
- Predictable order values and frequency
Behavioural Consistency
- Login patterns from familiar devices and locations
- Typical browsing behaviour before purchases
- Standard communication patterns with customer service
Detecting Anomalies Through White Signals
The power of white signals lies in anomaly detection. When trusted accounts deviate from established patterns, immediate red flags emerge:
- Sudden spikes in return rates or cancellations
- Unusual high-value purchases from previously moderate accounts
- Changes in delivery addresses or payment methods
- Password changes followed immediately by transactions
As Tarun Singh cautioned: “If you see there is a password change with a login involved then you got to be like hey though this is a white signal I got to be cautious. So when an accounting order happens, everything looks good.”
This approach allows businesses to maintain a frictionless experience for genuine customers while quickly identifying suspicious activity that warrants investigation.
Looking Ahead: Preparing for Future Holiday Seasons
As we navigate Holiday Season 2025, the lessons from this expert panel provide a roadmap for both immediate action and long-term preparedness.
Immediate Actions for This Holiday Season
- Review your current fraud prevention measures against the payment and policy abuse threats highlighted
- Ensure your team is trained on social engineering tactics
- Verify your white signal monitoring is operational and effective
- Prepare for volume surges that can obscure fraudulent activity
Long-Term Strategic Investments
- Build comprehensive fraud intelligence capabilities
- Invest in AI and machine learning for pattern recognition
- Develop strong partnerships with payment processors and fraud prevention vendors
- Create feedback loops between fraud teams, customer service, and product development
The Continuous Journey
Fraud prevention is not a destination but a continuous journey. As Tauwfiq Wahidi noted about tracking customer behaviour: “Anything which is not in line with the customer’s repeated history becomes an immediate red flag.”
This principle applies to businesses as well. Anything that deviates from your expected fraud patterns should trigger investigation and potentially strategy adjustment.
Conclusion
The 2025 holiday season is poised to be a period of unprecedented commercial activity, but for businesses, this peak opportunity is inextricably linked with peak risk. The confluence of increased transaction volumes and the rising sophistication of malicious actors presents a dual challenge: maximising legitimate revenue while rigorously defending against financial and reputational damage from fraud. Our expert panel’s key insights provide a strategic framework for navigating this complex landscape:
Fraud is geography-specific: Tailor your defences to your specific markets and understand that North American businesses face particularly high payment and policy abuse risks
- Modern fraudsters are sophisticated scammers: They exploit psychology and business processes rather than hacking systems
- Balance is critical: Protect against fraud without creating unnecessary friction for genuine customers
- Agility is essential: In the AI era, threat landscapes evolve rapidly and require constant vigilance
Additional Resources
For businesses seeking further guidance on fraud prevention:
- Review your fraud prevention measures regularly and adapt to emerging threats
- Consider implementing or upgrading your fraud detection systems before the holiday surge
- Train your entire team on fraud awareness, not just your security staff
- Direct specific questions to fraud prevention experts who understand your industry and geography
The fight against fraud is collaborative. Share intelligence with industry peers, participate in fraud prevention forums, and stay informed about emerging threats in your region and vertical. Together, businesses can create a safer ecosystem for genuine customers while making fraud increasingly difficult and unprofitable for scammers.
For more information about protecting your business during the holiday season, or to discuss specific fraud prevention strategies for your platform, reach out to us at Sensfrx and our fraud experts. We will assess your unique risk profile and recommend tailored solutions to keep your business secure. Don’t wait for a crisis to act and contact Sensfrx today and safeguard your success!
