As fraud professionals, it’s natural to focus on preventing fraud losses, but this often comes at the detriment of sales conversion. The nature of model-based risk management platforms and machine learning model training has this bias as well, mainly as a result of the fact that it is much easier to recognize missed fraud than it is to recognize sales insults.
Credit Bureau and fraud prevention services provider TransUnion announced plans to acquire IP geolocation and identity reverse lookup provider Neustar for $3.1 billion in an all cash deal.
According to a recent study, eCommerce merchants in the US have experienced a 140 percent increase in fraud attacks relative to 2020, while every dollar associated with missed fraud costs organizations $3.60 on average, up 15 percent from before the pandemic.
Fraud and risk management strategies tend to focus so much on automated risk decisioning that improving manual review performance is often an afterthought. Consider the cost savings and increased revenue an organization could realize by cutting average order review times while also reducing sales insults and missed fraud on reviewed orders. This is why improving performance of manual reviews is at least equally important as efforts to reduce order review rates.
13% of organizations today have adapted Machine Learning and AI into their fraud detection protocols. Another 25% of organizations plan on converting from a rule-based system within the next two years.
In Europe, digital retail payments were to be become more secure and less susceptible to fraud with the introduction of SCA. Yet a new standard for competition is being set for payment service providers to create SCA payment flows with minimal friction.
The average order value during the Black Friday weekend was up 64 percent year-over-year, but during the entire months of October and November the average order value of fraud attempts was up 70 percent.
False positives were already a pain point for merchants but exacerbated by the pandemic. It is estimated that $146 billion worth of CNP purchase attempts are declined each year and more than half are falsely declined.
More than 36 percent of consumers admitted to falsely claiming a transaction was unauthorized or fraudulent while 31 percent falsely claimed a product never arrived, arrived damaged or was unsatisfactory, according to a recent study. While there is overlap of consumers who have made each of these false claims, this represents a meaningful share of consumers who knowing and willingly committed friendly fraud.
Merchants are less likely to dispute chargebacks on transactions originating from mobile wallets and significantly less likely to win those they choose to represent. Consumers may be more prone to commit friendly fraud with mobile wallet transactions and the dishonest ones may already be exploiting this trend.