Online retailer, Z1 Motorsports, slashed fraudulent transactions and chargebacks by 90 percent within one year of adopting Melissa’s digital identity verification solutions. Before turning to Melissa, the Atlanta-based automotive retailer was suffering annual losses of USD 250,000, plus labour costs. Here is Z1’s story.
High stakes
Z1 Motorsports is now one of the largest suppliers of high-performance automotive parts for do-it-yourselfers and enthusiasts of Nissan and Infiniti sports models worldwide. Unfortunately, to get to where it is now, the ecommerce business had to go through a few growing pains. One of those was learning how to handle the influx of fraudulent transactions that came with an expanding ecommerce business.
Even though most of Z1’s customers were legitimate, it was experiencing USD 250,000 in annual losses, associated with regular fraudulent transactions.
Sometimes fraudsters would pay with a stolen credit card, but more often than not, the organization was hit with a sneakier form of fraud – chargebacks. A chargeback occurs when a fraudster takes delivery of a product and then promptly denies payment through his credit card provider. While the process is time and labour intensive, it usually doesn’t rule in favour of the merchant.
Stemming the loss
Alistair Cruickshank, director of IT at Z1, knew that something had to be done. The company was going to have to somehow determine how to ship parts only to legitimate customers while warding off orders from the fraudsters as quickly as possible. Cruickshank knew the key to controlling losses is to have the right information to make the decision to ship or not ship. His rule of thumb became this: if the customer is verified before the product leaves the building, the loss is minimal.
“When we’d received an order, we tried to make sure every customer was legit,” says Cruickshank. “We’d first look to see if the billing and shipping address were the same, or if there was a request for express shipping, indicating possible quick chargebacks as soon as they received the parts.”
Company staff also checked IP addresses against known fraudulent users, and even scanned Facebook and other online pages to verify suspicious customers. Despite intensively researching the customer for seven-and-a-half minutes per order, the company was still suffering from its share of ecommerce fraud.
Melissa zooms to the rescue
Fed up with wasted time and high costs, Cruickshank chose to seek help from an outside vendor. Having previously used Melissa, he contacted the leading provider of global contact data quality and identity verification solutions.
“At Z1, I decided to see what other services Melissa offered. I found out that the cost was so nominal there was no way not to consider using them,” Cruickshank said.
Z1’s first step with any order is to use Personator Web Service – Melissa’s an all-in-one contact checking, verification, move update and appending solution – to verify the customer’s name matches the address.
“Then, we pull property information, including billing and shipping addresses,” Cruickshank said. “If there are any red flags, we get them on the phone and verify their legitimacy based on what we already know through Melissa’s solutions.”
Cruickshank also opted to implement Melissa’s US Property Data service. It provides accurate real estate and property data on more than 140 million US properties including building information, property owner identification, owner mail address and more.
The payoff has been dramatic. Z1 began using Melissa in 2017, running about USD 1.5 million worth of suspicious orders through its verification tools. After just one year, USD 250,000 in annual chargebacks were reduced to USD 22,000. The company also has greatly improved its chargeback challenges with credit card companies because of its now-rigorous customer verification procedures.
Meanwhile, the labour cost of manually verifying customers has been dramatically reduced, from 7.5 minutes per flagged account to a mere 1.5 minutes on average.
In tandem, Melissa’s Personator and US Property Data offer an unparalleled approach to ecommerce customer verification, Cruickshank said.
About Melissa
Since 1985, Melissa has specialized in global intelligence solutions to help organizations gain an accurate SCV. Our breadth of data and flexible API technology integrates with numerous third-party platforms, so it works for your business. More than 10,000 clients worldwide rely on Melissa for identity verification and data quality, including US and global address, phone and email verification, matching and enhancement services – to gain insights and drive meaningful customer relationships.
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