How a fast-growing online retailer avoids fraud and controls costs with ClearSale

+99.8% orders approved each month

Thousands of dollars in avoided fraud per month

Reduced fraud prevention costs

"The biggest impact to our business has been the decrease in costs for fraud detection while maintaining a high level of protection and peace of mind.”

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Roumen Staykov, Sportitude Founder and CEO

Sportitude Curbs Fraud Losses and Fraud Prevention Costs with ClearSale

Australian sports footwear and apparel retailer Sportitude was on a winning streak in terms of growth, but fraud prevention expenses were affecting the store’s game.
“As our business continued to grow, the cost of fraud detection became more and more significant. We were using a service that guaranteed against any chargebacks, but the cost of that far outweighed the benefits for us,” said Sportitude CEO and Founder Roumen Staykov.

  • Up to 99.8% of orders approved each month
  • Thousands of dollars in avoided fraud per month
  • Reduced fraud prevention costs

The Challenge: Prevent Fraud While Spending Less on Fraud Control

Sportitude’s previous fraud prevention solution was stopping fraud, had a chargeback rate of 0.5% and kept order approvals relatively high, which meant that comparatively few good orders were declined by mistake. Avoiding false declines is critical for online retailers in order to maximize revenue, maximize customer lifetime value and prevent brand damage.

  • 38% of Australian consumers will never order again from a merchant that declines their order.
  • 22% will post about the decline on social media.
Source: Sapio Research B2C Consumer Survey for ClearSale, March 2020

However, the cost of Sportitude’s previous fraud prevention service—which included a guarantee that Sportitude would not incur any chargeback costs—was becoming an issue as the company grew.

What Sportitude needed was a fraud solution that could deliver the same quality of fraud prevention and order approval without the premium cost of a chargeback-guarantee product, so they could avoid fraud losses, approve the most orders possible, retain as many customers as possible and reduce fraud-control expenses.

The Solution: ClearSale Total Protection

ClearSale gives clients a choice of solutions to fit their needs and budgets.

Total Guaranteed Protection includes 100% guaranteed chargeback coverage, so clients never have to pay fraud-related chargeback costs.

Total Protection allows the customer to help set a target chargeback percentage that ClearSale aims to meet or surpass. Total Protection includes chargeback protection to ensure that clients don’t face chargebacks. Unlike Total Guaranteed Protection, Total Protection does not offer a direct reimbursement for chargeback costs, but if the target chargeback rate isn’t met in a given quarter, the client gets a discount for that time period.

Because Sportitude didn’t have a major problem with chargebacks and wanted to control their costs, they chose ClearSale Total Protection. Now, ClearSale:

  • Screens every Sportitude order with artificial intelligence (AI) and machine learning algorithms to flag orders that could be fraud.
  • Puts every flagged Sportitude order through a fast, accurate manual review by expert fraud analysts. With more than 1,000 fraud specialists on our team (the world’s largest), ClearSale has reviewers with expertise in virtually every industry, fraud method and customer segment. This review allows Sportitude to approve more good orders, generate more revenue and maintain customer loyalty.
  • Feeds expert review results into the machine-learning algorithm so it learns to better understand how Sportitude’s good customers behave in contrast to fraudsters.
  • Works with Sportitude to meet and exceed targets for chargeback reduction and provides clear reports on order approvals, chargebacks and prevented fraud.
  • Saves Sportitude money by preventing chargebacks and related fraud losses, approving as many good orders as possible and providing the right type of solution for the company’s needs and budget.

The Results: More Orders Approved, Fewer Chargebacks, Lower Fraud Prevention Costs

Since November 2020, when ClearSale started handling fraud protection for Sportitude, through May 2021, monthly average approval rates increased from 98.96% to as high as 99.80%. Chargebacks stayed at zero from November through February.

In March 2021, the store was hit with a spate of fraud attempts during the Australian online mega-sale event, Click Frenzy. Criminals tried to use different postal locker addresses with the same billing address in an apparent attempt to make the orders seem like they were coming from unique customers. That month, the approval rate dropped to 98.86% while ClearSale prevented thousands of dollars’ worth of fraudulent orders.

Sportitude_Graph1

Sportitude_Graph2

Despite the March fraud increase, chargebacks increased to no more than 0.31% of the total monthly order value, still below what Sportitude’s previous fraud prevention provider had achieved.

Sportitude_Graph3

Meanwhile, Sportitude has generated more revenue from approved orders with ClearSale than before, including during the uptick in fraud in March.

Sportitude_Graph4

Seven months into their working relationship with ClearSale, Sportitude has seen

  • Monthly order approval rates as high as 99.8%
  • Prevention of more than thousands of dollars in fraudulent transactions
  • An average monthly chargeback rate of 0.087%
  • Lower fraud prevention costs

Teaming up with ClearSale is a win for Sportitude

With ClearSale, Sportitude has the freedom to sell without the fear of fraud, false declines or exceeding their fraud-control spending targets, so they can focus their resources on growth.

“ClearSale offered us a simple service option which doesn’t guarantee against chargebacks, but it does give us fraud detection and the cost savings were significant, so it was an easy decision.”

See how ClearSale helps other businesses win the fight against fraud.

More than 4,000 clients trust ClearSale to outsource their online fraud operations.

 

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