Fraud Management Is Complex: Here’s What to Consider

Guidance for
In-House Fraud Management Teams

Managing fraud can be time-consuming and is only getting more complex as fraud methods become more sophisticated. Before you decide to take your fraud management in-house, review the challenges you may face – and the options you may have.

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A Small Team With
a Very Big Job

For in-house fraud protection teams, the daily high-priority to-do list never gets any shorter. If you’re part of an ecommerce team growing at a fast pace, if you’re selling high value-added and easy-to-resell products, or if you’re in a company with headcount restrictions and lengthy hiring processes … you may find it difficult to sufficiently address the challenges of fraud prevention.

Fraudsters are constantly tweaking their attacks and becoming more sophisticated with the way they steal. Combatting fraud is clearly important – but managing fraud too stringently can also lead to poor ecommerce performance, including:

Lower approval rates Lower approval rates
Worsening customer insult rates Worsening customer insult rates
Delayed decision times Delayed decision times
Higher back-office fraud-related costs Higher back-office fraud-related costs

Amid all these challenges, in-house fraud teams also have to account for a litany of ongoing challenges as the normal run of business. It’s a big job, and if you’re committed to managing your ecommerce fraud in-house, you need to be prepared for many different factors and scenarios.

Is Your In-House Fraud
Team Prepared?

Before launching your in-house fraud team, think through how the team will handle these areas of identifying and preventing ecommerce fraud.

Staffing

  • Will your team need specific industry or geographic experience?
  • Will your team need to speak specific languages?
  • Will your team need data scientists and/or statisticians?
  • How many supervisors will your team need?
  • Will you need to utilize or collaborate with your customer service team?
  • How will you train your team?
  • How will you ensure your team stays ahead of emerging fraud trends?
  • How will your team manage high-volume sales periods?
  • How will you audit the performance of your team?

Technology & Automation

  • What part of the review process will you automate?
  • How will you select the technology/software tools your team will need?
  • Will you need to customize any of the tools you purchase?
  • Will you need support from your IT department to set up or maintain any of the tools?
  • How will you set your fraud rules?
  • How will you validate that your fraud rules deliver the outcomes you expect?
  • How will you utilize fraud scoring in conjunction with those fraud rules?
  • How often will you audit and update your fraud rules and fraud scores?

Manual Review Processes

  • What part of the process will require manual reviews?
  • What will your manual review process look like?
  • How much time should a manual review take?
  • When multiple orders come in at the same time, which orders should be reviewed first?
  • Will you batch analyze orders, or will all orders be reviewed individually?
  • How will you manage sales expansions into new products or new markets?
  • How often will you audit and update your manual review processes?
  • How will you verify your team is following the processes correctly?

Measurement

  • What will “quality performance” look like for your team?
  • Which KPIs will you use to measure your team’s performance?
  • How will you benchmark that performance against industry standards?
  • How will you validate how accurately your team identifies fraudulent transactions?
  • How will you know if legitimate orders are incorrectly declined (i.e., false declines)?
  • How often will you report on performance?
  • Who will need to see your team’s performance reports?
  • Will different stakeholders need different reports?

As you can see, in-house fraud teams have a very big job with very high stakes.

Unless your company has a large and experienced ecommerce fraud team with access to data, technology, and enough budget to scale quickly when needed...you may find yourself struggling to prevent fraud effectively. And you may be leaving money on the table.

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With 20+ years of experience and 5,000+ customers around the world,we bring extensive industry-specific ecommerce fraud experience.

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From the viewpoint of someone who has been the victim of Credit Card Fraud

"We are in the Durable Medical Equipment supply industry and we use Shopify as our shopping cart. With Covid 19 we have seen a tremendous increase web traffic and online purchases. Prior to Covid 19 we had a number of fraudulent transactions that led to multiple investigations on Local, State and Federal levels all of which produced no returns only because the crooks were faster. This cost us in..."

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