Brands spend months planning their marketing strategy for the winter holiday season. As many marketing teams know, capitalizing on the surge of holiday shopping, especially online, can be highly competitive no matter your industry. Unfortunately, you’re also competing against scammers and counterfeiters, who ramp up their fraudulent efforts during the holidays.
As consumer spending reaches new heights during this festive period, the allure of holiday deals and discounts is paralleled by the escalating threat of scams. Protecting your brand and maintaining customer loyalty become especially important during this high-risk period.
The holiday season is a prime time for scammers to exploit vulnerabilities. Brands must implement robust security measures to not only protect their bottom line but to preserve the trust and loyalty of their customers and prevent legal implications. In this blog, we outline 2023 holiday shopping trends, scams taking place during the holiday season, the impact on business, and how brands can assess their vulnerabilities.
Holiday Season Spending Trends
The holiday shopping landscape is evolving, with Black Friday, Cyber Monday, and member-exclusive discount days gaining unprecedented popularity year over year. According to McKinsey & Company, the 2023 holiday shopping season “started early and will end late,” reflecting an extended period of increased consumer spending, compared to single-day sales of the past. Member discounts are also seeing an increase in popularity among brands looking to capitalize on customer loyalty and incentivize customers to create accounts to get early access to sales.
With the shift towards online shopping, social media and paid advertising are becoming pivotal in reaching potential customers. Younger generations especially are doing more and more of their shopping through social media, and the holidays are no different. Retailers started promoting holiday ads on social media as early as September, and sources show customers have started shopping for the holidays as early as August.
The economic climate of the past year raises questions about the impact of inflation on consumer spending—will shoppers continue to spend more despite rising prices? Research has shown that consumers are basing their purchasing decisions more and more on finding the best deals for the products they want. This means timing their purchasing decisions on when they think they will get the best price, especially during the holidays when sales and promotions are common.
Understanding the Landscape of Holiday Scams
As businesses gear up for holiday promotions, there are multiple avenues scammers can take to prey on your customers. Fraudulent domains and websites, social media ads and impersonation, false promotions and discounts, counterfeit products, and gray market sellers all pose significant threats to brand integrity. It’s crucial for businesses to understand the breadth of holiday scams that can impact their revenue. Marketing professionals must be vigilant, ensuring that their hard work in devising holiday promotion strategies does not fall victim to scammers seeking to steal revenue.
Fraudulent Domains and Websites
A majority of consumers looking to shop online will make purchases through retailer or brand websites. Scammers create fake websites that have similar domains and look identical to authentic websites, tricking unsuspecting consumers into providing credit card information, account credentials, and other Personal Identifiable Information. With the surge of consumers making purchases online during the holiday season, scammers ramp up their efforts during this time as well.
Social Media Ads and Impersonation
Social media continues to grow its capabilities as an online shopping platform. Unfortunately, it’s also one of the easiest and fastest ways for scammers to create fake accounts to impersonate a brand online. Scammers can also create fake social ads pretending to be reputable companies. These fraudulent ads and accounts then direct unsuspecting users to fake websites, where they can rip them off or steal sensitive information.
False Promotions and Discounts
Due to the current economic climate and rising inflation, consumers are on the lookout for sales so they can make purchases at a lower price point whenever possible. It’s becoming more and more common for brands to run online promotions and special sales, especially through the holiday season, and this is leading to an increase in fake promotions and discounts from scammers. Through the use of fake social media accounts, online marketplaces, fake websites, and domains, and even phishing scams, customers looking to purchase your products on sale can fall victim to holiday scams like this.
One of the most insidious ways brands lose revenue is through counterfeit products, and the problem is only growing. Counterfeit products often come at aggressively low prices, profiting off of the trust of unknowing consumers looking for a bargain during the holiday season. With online shopping, consumers intending to purchase a legitimate product often won’t realize they have purchased a counterfeit product until it arrives, and even then some may never notice. That means your brand is losing out on revenue, which is instead going into the pockets of counterfeiters. Additionally, loyal customers can be harmed by counterfeit products that are often produced with subpar materials and a lack of regard for quality and safety. Having an anti-counterfeiting strategy in place is vital in protecting your brand and your customer base.
Gray Market Sellers
Gray market product sales are when unsuspecting consumers purchase legitimate products that are either sold through unauthorized sellers or sold through authorized partners who don’t comply with your company’s terms. This could mean partners that are selling your products at a different price point than agreed upon or packaging your product in a way that goes against your brand standards or policies. Either way, your brand needs to be in control of all sales of your products in order to be successful, and gray market sales can interfere with your brand integrity and customer loyalty. Gray market sellers can be found on websites, social media, and online marketplaces, so you want to be monitoring for these sellers anywhere your customers shop.
Impact on Business Revenue
The consequences of holiday scams can have a significant impact on the success of your holiday selling strategies. Most marketing teams are putting in the work to create holiday promotion strategies months in advance to make the most out of the Q4 season. You’re creating campaigns to get your product in front of the right audiences, pricing it strategically based on extensive competitor and consumer research, maintaining your brand standards across all touchpoints with customers, and balancing capturing new market share while investing in customer loyalty. Scammers steal revenue by impersonating your brand, tricking consumers into making fraudulent purchases, selling counterfeit products, running fake promotions, and more. If you’re not accounting for threats to your brand’s integrity and revenue, you’re missing an important part of the big picture when it comes to business growth and campaign success.
Impact on Risk and Compliance
The consequences of holiday scams extend beyond stolen revenue and customer loyalty damage. Scams like the ones outlined above also put your intellectual property at risk, potentially leading to legal complications. Infringements on your brand’s trademarks, copyrights, patents, design rights, color marks, and trade dress often demand immediate action to enforce and take down, but can be a manually intensive, time-consuming, expensive process without proper systems in place, drawing precious resources away from other parts of the business. Using brand protection solutions improves the speed, volume, and accuracy of infringement detections, and can even help streamline the enforcement and takedown of bad actors by providing you with the expertise and documentation necessary, as well as providing valuable business insights.
Assessing Your Brand’s Vulnerabilities
How does your business currently account for the impact of when customers who want to buy your legitimate products unknowingly are swindled into purchasing through fraudulent websites, social channels, or marketplaces? Or how many counterfeit versions of your products are currently being sold? It’s important to gain an understanding of the scale of the impact these scams have on your business’s operations and growth, because the numbers may surprise you.
Here are a few questions to help you assess your brand’s vulnerability to scams during the holidays:
Are your domains secured? Are you actively monitoring and taking action to prevent fraudulent domains and websites?
Due to the amount of damage that can be done to your customers and your brand when scammers create fake versions of your websites, it’s important to be able to identify and take those sites down quickly. Even just a few fake websites can take valuable time and resources to take action against, so having a plan and process in place can help during the busy holiday months when those instances may increase. While active and ongoing monitoring and management is important, securing your domains can be an effective way to prevent some instances before they happen. By registering relevant domain names to your brand, you make it harder for scammers to trick your customers with similar URLs.
Is your social media presence authentic?
Whether your brand is extremely active on social media or rarely maintains its page, it is vital to track your presence and reputation on social media. This means monitoring for fake accounts posing as your brand, or unauthorized uses of your brand’s IP.
Do you have a whitelist of your official sellers? Do you know if you have gray market sellers?
The holidays can be a hectic time, so having a whitelist of your official sellers can save you time in the case of verifying a questionable seller. It can also help to have an up-to-date list of sales and promotions running per partner to ensure no unauthorized discounts are promoted, especially through the holidays. This will also help you easily identify gray market sellers or counterfeiters that may be flagged.
By identifying your brand’s vulnerabilities, you can be better prepared for the challenges that may arise during the holiday season.
As brands continue to invest in growth opportunities during the holiday season, which the data shows is becoming longer and more popular with consumers, it’s important to plan for scammers who will follow suit. Being aware of the kinds of scams that exist is the start. It’s equally important to understand the full impact of those scams as well as your brand’s unique vulnerabilities in order to create a strategy that is right for your business.
Tracer offers comprehensive brand protection solutions tailored to your situation to monitor, manage and take action against these kinds of scams, while providing you with valuable brand intelligence insights, so you can focus on generating revenue and driving growth during the holidays, instead of fighting off scammers.
Learn more about Tracer’s brand protection offerings by getting in touch with our team today.