It is true that with this COVID-19, online orders, in general, have skyrocketed incredibly, and this has had a positive effect for the business, but on the other hand, it has represented a very hard time in the containment of fraud. Unfortunately, the stores have closed for a while, so that any fraudulent customer relationship with the stores has been minimised. However, in the face of the avalanche of online sales, the fraudulent customers have completely changed their approach and their performance, which has allowed it to blend in very well with legitimate customers.
That has meant an incredible job for the fraud team in separating the big wheat from the chaff and being able to analyse behaviours, create new patterns of legitimate customers and fraudulent customers that have allowed us to detect them and therefore stop that fraud.
Once customers return to buy in stores regularly, these services will have special relevance, basically because they are strategic for businesses that seek to provide an omnichannel experience.
What about the old patterns such as ATO, omnichannel fraud? Have fraudsters improved their tactics and took advantage of the loopholes even more?
One thing we’ve been working on for a long time is studying customer behaviours. I think it is very relevant not only to focus on how the customers behave in the trade itself, but what they do outside, anonymously of course. This strategy enriches the information and facilitates decision-making, as your client behaves outside your company with a high degree of probability that they will behave the same in yours.
This is critical in fraud, because yes, the business always goes after the fraudulent, but if you know how the fraudster behaves both outside and inside, you can establish rules that allow you to have alerts, not deny directly, because companies are to sell and consequently make the best decision for your business.
Obviously, those who are dedicated to fraud know about this and what they do is increasingly resemble legitimate clients, therefore, if you only stay with what a client does within your business you are missing a part of the movie. And to see the full movie, machine learning tools, agile providers, and, above all, a great team constantly monitoring this data with the objective are key.
What is the situation with chargebacks, especially in fashion retailing? More illegitimate chargebacks in 2020 and beyond?
Unfortunately, during this crisis that we are experiencing, chargebacks have increased in many new businesses that due to the COVID-19 situation have been forced to run online stores.
Other large merchants that had the fraud team as a commodity have also been impacted by an increase in fraud that has led to a growth in chargebacks. In our particular case, due to all the efforts we make in the area of fraud and total alignment with the business, we have been able not only to detect fraud but also to stop it, reducing chargeback ratios and considerably increasing acceptance. The fraud team in our company not only has the mission of fraud prevention but also that of selling more, and now more than ever.
There is no exact science to managing fraud, and every fraud manager has his or her own way. Mine is based on five premises:
That being said, a company that can manage fraud effectively must make every effort to red-carpet legitimate customers and make life miserable for fraudulent ones.
What is your take regarding the life of ecommerce after SCA?
Honestly, nobody knows exactly what is going to happen. The regulations still have some incongruous points that PSPs/acquirers/ issuers or even schemes don’t know how to solve. On the other hand, the EBA says that it will meet the scheduled start dates today.
I think that with all this regulatory change, the trade has been blamed a lot and this has forced us to make extraordinary developments because we do not want our clients to be impacted. But who really should be prepared is each and every one of the European issuers and in turn, the PSPs and processors. It does not make sense for a business to be prepared if the one who has the last word is not. A lot has been thought about regulating but little about the customer experience.
Therefore, in order to prevent this looming chaos, we have raised any of the scenarios that can happen with this, and we hope to have a high volume of frictionless transactions.
I must also say that I expected more from the PSPs, not in terms of advice on PSD2, but rather I expected them to launch alternative products that would enhance Open Banking to provide a solid alternative to card payments. This has not happened yet.
Nevertheless, I think there will clearly be a ‘before and after PSD2’ …. I will tell you in our next interview.
This interview was published in the Fraud Prevention in Ecommerce Report 2020/2021, the go-to source in securing transactions while offering a frictionless customer journey.
About Carlos Madrona Guillén
Carlos Madrona, with a huge experience in payment methods and fraud management, joined the company in 2015 as Head of Online Fraud. In July 2017, he was promoted as Director of Payment Methods and Fraud, a position in which among others he aims to lead the strategy of payments and fraud, online and offline in all the markets where Mango has presence. Recently, he has acquired a new role leading the Internal Control and Compliance team.
About Mango
MANGO was founded in 1984 and is today one of the leading fashion groups in the world. Based in its city of origin, Barcelona, the company has an extensive network of more than 2.100 stores in 110 countries. From its ‘El Hangar’ Design Centre in Palau-solità i Plegamans, every year it designs more than 18,000 garments and accessories for wearing the season’s trends. The company closed the 2019 financial year with sales of EUR 2.3 billion.
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