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.
It is understood that manual order reviews are a critical component of fraud prevention strategies, but like risk strategies overall, manual reviews tend to focus on third party fraud and often neglect other forms of fraud and abuse. The harsh reality is that fraud is a broader problem than identity and third party payment fraud. Since the onset of the pandemic, other forms of fraud, such as refund and promotion abuse, have increased. Manual reviews need to broaden the scope accordingly.
It’s no secret that fraudsters increase their activity and fraud attempts during the holiday season when many merchants are at peak volume, but considering other fraud factors ACI Worldwide predicts a more than 40 percent increase in fraud this holiday season. Meanwhile the FBI warns of fraudulent merchants, mobile apps with malware and work from home scams that become more prevalent during the holiday season.
According to estimates from ACI Worldwide, online retailers will see a 12 percent increase in fraud attempts globally this holiday season compared to last year, although the average purchase amount per fraud attempt is expected to be lower. Card Not Present channel fraud attempts in the United States, however, are expected to increase at a much higher rate, 43 percent by volume compared to last holiday season. This significant increase is primarily due to the expected shift in fraud to the CNP channel following the rollout of EMV cards.
Since many merchants rely on manual reviews for effective risk management they should be performed in the most cost effective way. This white paper is focused on building the business case for making considerations around maximizing the net benefit of performing manual reviews, whether they are performed internally, by a third party or a combination of both.
The Fraud Practice’s latest white paper, titled “Building the Business Case: When it Makes Sense to Outsource Manual Reviews”, seeks to help organizations build out this business case and is available for free today.
It can be difficult for merchants to really understand how well they are performing with manual reviews for online fraud management relative to their peers. In this FraudBlog post we look at merchant reported statistics from three surveys covering merchants of all sizes in North America and the United Kingdom highlighting major differences between high and low revenue e-tailers.
One key metric is the manual review rate, or number of transaction attempts that are queued for a manual review. This varies greatly by merchant volume as merchants processing tens or hundreds of million transactions per year cannot feasibly review a high portion of order attempts. Many start-up and smaller merchants, on the other hand, may review nearly any transaction that isn’t squeaky clean.
The Fraud Practice discusses the importance of taking the time to consider the options for performing manual review as it is a good way to protect the two most important assets a merchant has: their customer and their brand.
When an order has a mix of high and low risk signals or the merchant just isn’t sure about the true level of risk, manual reviews provide a better alternative to either refusing the sale or accepting it blindly. When these orders are all declined merchants miss out on the potential lifetime value of many customers they wrongly turned away. Whereas one good purchase experience can lead to many more down the road, falsely labeling a transaction as fraudulent and refusing the sale can lead to that customer never coming back. On the other side of the spectrum, accepting all of these orders and hoping for the best can lead to significant brand damage from high fraud losses and consumers associating the merchant with a fraud problem, both resulting in a negative impact on the merchant’s bottom-line. In this context manual reviews protect both the brand and the merchant’s customers.
Many merchants struggle to fully handle risk management and manual reviews in-house, especially with changes in volume and fraud patterns. While many organizations are aware there are third party vendor manual review services available in the market, fewer merchants are aware that when it comes to outsourcing manual review it doesn’t have to be an all-or-nothing decision.
The Fraud Practice provides the following article to discuss circumstances when it may best for an organization to seek third party vendor help with manual reviews and risk management while retaining anywhere from some to most of this responsibility in-house. Depending on the organization and the activity they are experiencing, this could range from light to extensive levels of assistance, and it is important for organizations and risk directors to be informed about all the options available in the market today.
As we enter the 4th quarter eCommerce fraud teams are ramping operations to support the holiday rush. The blunt force of added resources stretches management bandwidth and impacts team engagement. Managers can quickly assess their team’s engagement and apply a strategy that will help drive fraud team engagement to peak levels during the 4th quarter.
It is critical for senior management to be prepared with a strategy to keep the fraud team engaged as it grows along with the transaction volumes. Consider several simple tasks managers can focus on today while fraud teams endure the peak sales and fraud attempt season.
Online shopping has grown year-after-year while becoming an increasingly important portion of total Q4 retail sales. Last Cyber Monday online spending in the U.S. alone exceeded $1.4 billion while the share of Black Friday sales occurring online has increased from 3.5 to nearly 7 percent since 2005. Online and multichannel merchants must make many preparations for the holiday sales rush in terms of being able to meet customer expectations, keeping their sites and mobile apps functioning properly, and defending against fraud and attacks.
Reverse look-ups, IP address checks as well as several other free and low-cost manual review tools and techniques that can be done by small businesses are the topic of this guest article written by a Certified eCommerce Fraud Professional.