The landscape of online fraud is rapidly changing, and many businesses are struggling to keep up. No longer limited to stealing credit card information, criminals are constantly adapting and finding new ways to defraud users. The Sift Digital Trust & Safety Survey (results published in free Ebook: Leading the Digital Trust and Safety Transformation), found that while two-thirds of online businesses face payment fraud, 63% are battling fake accounts, 55% are fighting fake or spammy content, and 42% deal with account takeover.
In this new landscape, it’s imperative for leaders to understand how to balance a proactive and comprehensive approach to managing risk with an equally important goal: enabling revenue growth.
New capabilities lead to new types of risk
Growth begins by responding to customer demand. Therefore, companies are adding new features and capabilities – such as user-generated content, peer-to-peer transactions, referral programs, and on-demand delivery – designed to increase customer adoption and engagement. But these new offerings open businesses up to new risks. For example, marketplaces must simultaneously deal with multiple types of abuse: from scammers trying to lure buyers to pay for goods off-site to money launderers using the buyer/seller relationship to funnel funds.
Online gaming sites often struggle with account takeover attacks. Not only can fraudsters access any saved virtual currency in the compromised account and resell it for a profit, but they can also send unsuspecting players links to malicious content – such as spam, scams, and phishing sites.
And on-demand ride services across the globe face unique scams, such as drivers looking to illegitimately inflate their numbers for bonuses by setting up fake driver and rider accounts and pretending to complete the trips.
Digital Trust & Safety
But looking at the spectrum of potential fraud risks is only half the battle faced by modern fraud teams. Wrapped around all of this is the central challenge of every fraud professional: balancing risk with growth.
This is at the heart of Digital Trust & Safety, a new approach that strategically aligns risk and revenue decisions, supported by processes and technology. It isn’t just about fraud prevention. Digital Trust & Safety encompasses everything from risk mitigation to content moderation, from customer data protection to compliance. Instead of taking a narrow view of the customer experience and fraud prevention, the Digital Trust & Safety mindset invites a broader perspective: customer journeys rather than customer actions, and fraudsters’ behaviour rather than fraudsters’ attacks.
3 ways to incorporate a Digital Trust & Safety mindset
1. Align cross-functionally
In the Sift Digital Trust & Safety Survey, 57% of respondents admitted that revenue-driving goals and fraud prevention goals are not fully aligned. That’s because in many companies, the risk and growth teams exist in separate silos and don’t communicate regularly.
Companies following a Digital Trust & Safety approach proactively ensure that fraud teams are stakeholders in product decisions, and vice-versa. They set join goals, create cross-functional lines of communication, and incentivize the various groups to collaborate on reaching those goals. In fact, risk teams can actively support revenue growth by enabling new products, features, and regions to launch faster and more smoothly.
2. Share data and learnings
To make sure this collaboration runs smoothly, it’s crucial to give all stakeholders access to the data they need to make informed decisions. This includes data on how users interact on the platform, what pages they have viewed, time spent on each page, what products they’ve bought, email correspondence, and more. Customers give up so much data, either passively (browsing data) or actively (email address). This is just about collecting it into one source of truth.
The teams then work together to decide how to balance risk vs. reward on an operational level. Where can the system be abused? Are there security checks in place that don’t need to be there? What types of orders are all stakeholders comfortable with automatically accepting?
3. Customize friction based on risk
At the heart of successfully balancing fraud prevention with an outstanding customer experience is the ability to adapt the user journey based on a customer’s risk, so that low-risk users have the smoothest possible experience on your site. We call this practice “applying dynamic friction.”
To apply dynamic friction, you need to leverage the right tools and technology. Nearly two-thirds (60%) of companies using rules for fraud prevention admitted that rules block legitimate customers, according to the Sift Digital Trust & Safety Survey. In contract, machine learning allows companies to capitalize on the wealth of insights from across the customer journey – including behavioural data – and tailor the user journey accordingly. A call for change
It’s clear that the status quo for fraud prevention no longer works. Our survey found that while 77% of online businesses prioritize delivering a frictionless customer experience, 58% believe that fraud prevention hinders their ability to do that. To adapt to Digital Trust & Safety, you need to challenge comfortable ideas, learn about the new tools and processes that will guide your company forward, drive core processes, and embrace innovation. You need to change mindsets across your entire organization. As the saying goes, the only constant is change. Those who do not adapt will be left behind.
About Kevin Lee
Kevin Lee is a Trust and Safety architect at Sift who helps customers implement strategies that cross-functionally align risk and revenue programs. He has lead various risk, chargeback, spam/scams, and trust and safety organizations at Facebook, Square and Google.
About Sift
Sift empowers online businesses to unlock new revenue without risk by dynamically preventing fraud and abuse. More than 34,000 sites and apps use Sift for its industry-leading technology and expertise, an unrivaled global data network of 35 billion events per month, and a commitment to long-term customer partnerships. Learn more at Sift.com.
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