"Many businesses actually lose a meaningful percentage of their advertizing budgets to eCommerce fraud"
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Fraud Prevention Blacklists:  The eCommerce Sales Killer

Managing eCommerce fraud operations is no easy task; whether hiring, training, and managing a manual review team, monitoring approval rates, and optimizing internal rules, a fraud manager’s attention is often drawn to many places at once. With so much on their plate at any given time, it’s easy to understand why merchants are drawn to “silver bullet” solutions to manage and prevent chargebacks.

One “solution” to chargebacks often utilized by merchants is fraud prevention blacklists; when hit with a chargeback, all the transaction details are simply added to a blacklist, so that the next time an order is placed from the same IP address or using the same email, the transaction is automatically declined. While they may seem like a great way to streamline internal operations and to prevent future fraud, blacklists are in fact a misguided way to address chargebacks.

In using blacklists, you block not only fraudsters but also many good customers. Moreover, there are pretty basic methods fraudsters can use to “fool” your blacklists. In this post, I will explain why you should stop relying on blacklists for fraud prevention.

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Merchant Spotlight - Q&A with Vestiaire Collective

Founded in 2009, Vestiaire Collective launched with the aim of offering a high quality online marketplace in which members could buy and resell premium desirable fashion in a trusted environment. The site stands out from other platforms due to its knowledgeable curation team, authenticity and quality control process, and its extensive active community of global fashion lovers. Six years later Vesitaire Collective is now Europe’s leading trusted site for the resale of desirable premium and luxury fashion, and a cult favourite amongst style lovers with over 3 million members located in 40 countries worldwide.

We interviewed Michael Benisti, Head of Payments and Revenue Protection at Vestiaire Collective, who shared his tips for managing fraud while providing great consumer experience.

 

Vestiaire Collective is a very strong brand. What tips do you have for other retailers looking to build and strengthen their own brand online?

Vestiaire Collective’s marketplace business model is unique. I think the three key things that have helped us grow and become successful are:

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Introducing The Cost of Fraud Calculator

Unfortunately, those tasked with preventing CNP fraud often lack the required resources to achieve optimal performance. In fact, over 50% of the merchants surveyed in the Merchant Risk Council’s (MRC) 2015 Global Fraud Survey cited ‘lack of sufficient internal resources’ as one of the top three eCommerce fraud challenges they faced in the past year.

Senior executives do not allocate sufficient resources to fraud management because they fail to appreciate the true impact fraud operations have on their business as a whole. Risk and fraud professionals, meanwhile, struggle to clearly present the business case for investing in fraud operations to their superiors.

Along with our colleagues at the MRC, Riskified created the Cost of Fraud Calculator – a free, interactive tool that presents a holistic picture of the true cost of fraud for an organization and visualizes the business impact in a manner that can be shared with executives. Our hope is that senior managers will be more open to allocating resources to fraud management operations once they see the impact on sales revenue and customer experience.

Cost of Fraud Calculator

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Merchant Spotlight - Q&A with Ghurka

Everything about American luxury leather goods company Ghurka is linked to heritage – the company is named after the famously brave brigades of Nepalese soldiers who served in the British military, and the company still manufacturers bags by hand in its original Connecticut facility. However, the US-based retailer, founded in 1975, has managed to stay ahead of the times, with flagship stores in trendy New York City and San Francisco locations and a successful online store catering to both domestic and international customers.

We interviewed Justin Sellman, VP of eCommerce and Wholesale at Ghurka, who shared his tips for building a strong brand and optimizing consumer experience.

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How Understanding Reshippers Can Help Boost International Sales

The global B2C cross-border eCommerce market was worth $230 billion last year, and is predicted to grow significantly  hitting $1 trillion by 2020. Reshipping companies, which accept a package on the customer’s behalf and then forward the parcel to its final destination, play a central role in enabling cross-border eCommerce. This is especially true in emerging markets, which are projected to experience the strongest growth.

Online retailers generally consider reshipping companies, also known as parcel forwarding centers, freight forwarders, and reshippers, as a fraud indicator. This is because similarly to proxy servers, consumers can use rehsipping services to conceal their real location. The fact that risk scoring services will often trigger fraud alerts on orders shipping to reshipping companies also contributes to their negative reputation.

While it’s true that fraudsters use reshippers to try and cover their tracks, many legitimate customers also rely on these services. Merchants utilizing blacklists or rules-based fraud management systems are most probably unwittingly declining legitimate orders sent to reshippers. Whether you already sell globally or plan to start accepting non-domestic orders, it’s important to ensure you are well-equipped to accurately review international orders for fraud. In this article, we lay out the legitimate reasons for using reshippers and provide tips for distinguishing between the good and fraudulent orders.

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Stop Letting Psychological Bias Influence Your Fraud Operations

For better and worse, we humans are not driven strictly by logic and self-serving interests. While decisions based on empathy, social norms and love allow us to have a functioning society, they often fail us when it comes to managing a business. In business, it’s important that we try to overcome psychological biases and instead strive to make the best decisions based on data and facts.

The work of behavioral economists is devoted, among other things, to identifying and explaining the psychological biases that lead us to make suboptimal decisions. In this post, I’ll introduce a couple of well known behavioral economics terms and will illustrate their application in the field of eCommerce fraud management.

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What IsChargeback Insurance?

As the global eCommerce market continues to grow, eCommerce fraud will follow the same trend. Unfortunately, almost all eCommerce merchants have experienced the pain of fraudulent chargebacks. While it is possible to minimize chargebacks by rejecting all “risky” transactions, such a strategy is bad for business, as many good customers will be turned away along with the bad ones. In fact, our data suggests that 66% of orders typically declined by eCommerce merchants are actually placed by legitimate customers and should have been approved.

To help merchants accept more orders without the risk of costly chargebacks, we offer full chargeback insurance on all Riskified-approved orders. In this article, I explain how our chargeback insurance works, what it covers, and why Riskified offers this service.

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May 2015Events Recap

This month, our team attended three major industry events – the CNP expo in Orlando, the IRCE conference in Chicago, and the MRC Summit in Brussels, Belgium.

It was a pleasure to meet with both merchants and vendors, and to hear about their goals and challenges. Riskified was also honored to participate in several sessions during the MRC European Congress, including the Ignite session and the Future of Fraud Panel.

The Riskified team with colleagues at the MRC European Congress in Brussels (May 2015)
The Riskified team with colleagues at the MRC European Congress in Brussels (May 2015)
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Come Meet Us at IRCE (June 2-5, Chicago, US)

The Internet Retailer Conference and Exhibition (IRCE) is one of the world’s premier eCommerce events.  This year, the event is taking place at McCormick Place West in Chicago between June 2nd and June 5th. Riskified is proud to announce that we will be exhibiting throughout the conference and showcasing our eCommerce fraud prevention solution and chargeback insurance offering to attendees.

Interested in learning more about how Riskified’s solution can meet your eCommerce fraud needs?  Come visit us at booth #667 or click here to schedule a meeting.

We ValueYour Feedback

At Riskified we are constantly striving to provide our customers with the highest level of service and critical fraud prevention functionality.  We want to hear from you so we can better address your fraud prevention needs.  If you can spare 5 minutes of your time and complete our short survey we would greatly appreciate it.  Let’s put an end to eCommerce fraud together.

Click here to take our survey.

The Riskified Team.