When it comes to online fraud, the truth is that many eCommerce merchants simply aren’t fully aware of the problem. It’s not the first thing on anyone’s list when they’re thinking about the kind of website they want to run, the product they want to sell, or who to sell it to and why.
Even large companies, who invest in fraud prevention as a given, often think of it as a sort of box they have to tick, rather than really putting thought into how they can integrate their fraud fighting solution into the fabric of their company, making sure that it strengthens rather than weakens their business.
Whilst this approach is understandable, it is fundamentally misguided. Fraud impacts every aspect of a business, from marketing to sales and from shipping policies to conversion rates. Merchants who focus on avoiding chargebacks and fail to encourage everyone in their company to be aware of the issue of fraud and the measures taken to prevent it are missing out on an opportunity to both encourage growth and prevent loss.
Not convinced? Consider these scenarios:
- Your Marketing team is preparing to wow a new market, following the company’s decision to enter a country in South America. They’ve done their research, they’ve got a killer ad campaign mapped out, and they’re really excited about the possibilities they see. But they forgot to think about fraud, and the fraud manager is getting on with business as usual, working to limit the risk to which the company is exposed through blocking orders which look risky. Because the financial system works differently in this new country, and buyers there have different patterns of behavior, a large percentage of the orders coming in from this new market look problematic to the fraud department – and are rejected. All the effort that went into encouraging those people to try out your site was wasted, and there’s no telling if they’ll ever come back. They might even complain about their negative experience to friends. Even if someone picks up on the issue and it is resolved, it’s too late for a number of customers. Marketing and Fraud should have connected earlier.
- Sales are going mad, trying to work out why so few consumers are funneling down into paid up customers. It all looks good until the checkout stage, where something seems to be going wrong. It takes them a while, but they eventually discover that the new fraud prevention methods which were implemented following the massive data breaches of the last two years involved more stringent fraud detection policies, and the system is slower in consequence. In addition, more customers are being sent to manual review, meaning it takes longer than it used to for them to receive confirmation of their order, by which time some have given up and gone elsewhere. Sales are furious and complain to Fraud, who retort that it’s their job to prevent loss, not consider growth. This is another issue that should have been raised and resolved much earlier, as part of the process of making the changes to the checkout system in the first place. There is a balance to be found between the demands of growth and the demands of fraud prevention, and it must be discussed between the interested parties.
- Customer Services takes a call from an angry customer whose order was rejected. Then they get another call. And another. Apparently, those same tactics that were giving Sales such a headache are having a knock-on effect on Customer Services as well. They needed to be aware that this might happen, and should have received training from Fraud about how to manage the possible conversations. In turn, there should have been a process in place for them to pass that feedback back to Fraud, who can learn from it.
All these examples go to show how important it is to have good communication between the Fraud department and the rest of the organization. Fraud should know to take the requirements of the rest of the company into account, and other departments, for their part, should be aware of fraud as an issue that may impact their work, and needs to be taken into account.
Of course, for companies which use Forter, these problems are unlikely to arise.
- Forter works worldwide: the Marketing team can get geared up to enter any new country they like, and Forter’s fraud prevention system will be able to take care of the fraud. You can read more about how Forter handles fraud on a global scale here.
- Forter is fast: Sales will never have to worry about a slow checkout process. Forter’s hi-tech, ingeniously analytical system works in real-time, making it instant and thus invisible to the consumer. And it’s 100% automated, so there’s never any waiting time.
- Forter is fantastic at minimizing false positives: there just won’t be many cases where genuine customers are rejected because the system thinks they’re fraudsters. This has an impact on conversions in the short-term, and on growth in the long-term, allowing companies to expand by saying ‘yes’ where once they would have had to say ‘no’ through fear of fraud.
The fact is, in our line of work, we hear a lot about the problems that companies face when fraud prevention is treated as an independent island of loss prevention, rather than an integral part of the company and how it should be achieving its goals.
A New Way of Thinking About Fraud Prevention
The solution is a lot simpler than people think – but it involves a true shift in thinking. Fraud prevention professionals have to start thinking of their role as enabling the success of the business – increasing sales, improving customer experience, removing friction. And the rest of the company has to start thinking of fraud prevention as something that could impact them – and which matters to them.
Fraud prevention isn’t about stopping fraud or avoiding loss anymore. Companies which wake up to this new reality fast are going to have a competitive advantage: happier customers, more sales, and faster fulfillment.
The results of engaging with this new way of thinking make themselves felt very quickly. In a recent case study, a leading electronics retailer grew their sales 4%-6% with Forter, reduced false positives by 76% and improved fulfillment from 3 days to 1 hour.
Those results are not atypical. It’s time for companies to reassess how they think about fraud prevention. New technology combined with human expertise means that the new generation of fraud prevention isn’t just better – it measures on a whole different scale. It’s better for the company, better for customers, and better for the bottom line.