Merchants have started to offer more flexible shopping options, such as Buy Online, Return in Store (BORIS), and BOPIS, for example, in a bid to consolidate the omnichannel experience for their consumers. How have fraudsters exploited this move?
Fraudsters have already taken advantage of BOPIS because:
a) this is a new channel that many merchants just launched (or significantly expanded) due to COVID-19. With many newly launched fulfilment options or functionalities, risk mitigation isn’t always the business’ focus. Fraudsters are often the earliest adopters of new features and flock to where they see the potential for financial gain;
b) in the past, fraudsters would take advantage of delivery options like next-day shipping in order to get online orders fast. Trust & Safety teams would often see this as a risky signal. Now, the expectation is that all BOPIS orders should be fulfilled and ready for pick up in a few hours. This gives the merchant very little time to do fraud screens when conducting manual review. In general, merchants don’t want to risk a negative customer experience so they will err on the side of fulfilling the order;
c) during the physical pick up, very little verification is done. Buyers are usually wearing face masks so it’s difficult to verify identity.
With the significant growth of ecommerce purchases, a seamless transaction is just as important as a secure one. What are the best practices to enrich transaction details so as to avoid false positives, chargebacks, and boost customer experience?
Merchants must deploy checkout flows that have dynamic friction. Knowing that 99%+ of transactions are from legitimate customers, merchants should enable 1-click (or nearly 1-click) checkout for these customers. Every extra click and keystroke compromises customer conversion rate.
Merchants should only introduce friction (like having the customer enter in a CVV code) less than 1% of the time. Obviously, this takes a highly accurate machine learning driven system to know when to dynamically introduce this friction. This dynamic friction can become a competitive advantage for a merchant.
Sift has pioneered the Digital Trust & Safety approach in 2019. What is the value proposition of it now, with all these shifts in customer behaviour and fraud attempts increases, and why should businesses embrace it?
Sift launched the Digital Trust & Safety approach at the beginning of 2019 because we have seen consumer expectations and fraudulent attack vectors shift considerably over the last few years. Within the last year, we’ve seen a surge in payment fraud, account takeover, and content abuse. In fact, we just released a report showing the account takeover rates have increased 282% in 2019, and that rate has accelerated even more during the pandemic. It’s clear that consumer expectations and fraud are running in parallel with each other and as consumers adopt easier ways to transact, fraudsters exploit those channels. The value proposition of Sift is simple: allow every legitimate consumer to seamlessly interact on a website while dynamically introducing friction for malicious users. This can only be done at scale and with high accuracy with exceptional technology, tools, and data.
Fraud management teams are sometimes perceived as cost centres. How can these teams increase visibility and control of their fraud prevention operations?
In order to increase team visibility, try and align incentives of the risk team to company level goals. If your company has a goal of launching a new product or feature, how can the Risk team help make that happen? For example, if your company runs a marketplace that pays out merchants on your platform, what if the Risk team was able to unlock an instant payout feature without increasing losses?
The highest performing Risk teams that I’ve seen actually increase revenue for the company. How? They enable the company to grow faster, launch more products, and to reach customers that other competing businesses cannot reach. These Risk teams understand when, where, and how to dynamically apply friction to the user experience. The results are higher customer conversions and reduced/controlled losses. This is how the Risk team can become a competitive advantage and drive more value for the company.
The Q4 of 2020 was one of the most challenging period merchants have ever faced: handling more online purchases and extra costs in some departments, preparing for the sales season, and, in some instances, getting ready for SCA compliance. How did Sift support its merchants in dealing with all these challenges?
Sift enables companies to focus on what they are best at, delivering great products, experiences, and services. Risk and fraud should not have to weigh on the minds of these merchants, and that includes configuring SCA. Sift has built industry leading machine learning technology, tools, and data networks that allow merchants to scale and automate without risk.
This editorial 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 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. Prior to Sift, he has spent the last 14+ years leading various risk, chargeback, spam/scams, and trust and safety organisations at Facebook, Square, and Google.
About Sift
Sift is the leader in Digital Trust & Safety, empowering digital disruptors to Fortune 500 companies to unlock new revenue without risk. Sift dynamically prevents fraud and abuse through industry-leading technology and expertise, an unrivaled global data network of 35 billion events per month, and a commitment to long-term customer partnerships.
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