It's easy to stop fraud: stop selling

Posted by Rurik Bradbury on December 3, 2014

3-of-revenues-totally-wasted-facepalm

We talk to a lot of e-commerce businesses, often to C-level executives. They all know that online fraud is an epidemic, but most of them don't know the details. Some don't see much fraud, so they don't care. But they should.

The only way to have zero fraud is to have zero sales. Nobody wants that. But what happens is that lots of online sales get turned down just because of the possibility of fraud. It's "defensive e-commerce". In a foreign country? Declined. Shipping to a different address? Declined. Using a VPN? Declined. New account, with minor red flag? Declined. Order reviewed manually but customer can't doesn't respond (for whatever reason)? Declined.

And why should the fraud department at an ecommerce company care, if they are judged on fraud, not revenues? Often, they are judged by how little fraud gets through to the bottom line. So what's their natural reaction? Just refuse all slightly risky-looking sales. Job done. Fishy? Decline it or review it by hand.

Sure, a bunch of real customers are turned away, but all of the real sales that are declined don't show up on the fraud team's scoresheet or on reports to the CFO.

Research suggests that 3% of ecommerce revenues are simply turned away, without good reason. Imagine 1 in 33 people in a physical store being turned away from the checkout line, randomly, for no good reason. That would be crazy.

When incentives are aligned against revenue, this is a problem. You have an Anti-Revenue department instead of an Anti-Fraud department.

We'd love to talk to you about using our "digital fingerprinting" to get back that lost revenue, while still being aggressive about fraud. Here's more on our anti-fraud platform.

 

Topics: ecommerce, Antifraud, antifraud team