CNP Expo: CNP Fraud, Can We Stem the Tide?

May 20, 2014

CNP Expo: CNP Fraud, Can We Stem the Tide? Tuesday’s educational program kicked off with Aaron Press, director of E-Commerce Payments for LexisNexis Risk Solutions, observing that the question of how to stop fraud never goes away. But more e-commerce merchants are now asking, how do we stop fraud AND approve more orders?

Julie Fergerson, senior vice president of Industry Solutions at Ethoca, noted that “we’ve been so focused on fraud for so long, and one reason our prevention numbers are up is that we are used to turning down good sales, but we aren’t taking the cost of losing good customers into account when we calculate those fraud prevention numbers.” Harold Paulson, director of Risk Management at eBay Enterprise, agreed: “We could stop all fraud if we wanted to, but we would have no sales. This is really about customer experience. How do I have a successful fraud strategy in place that my customers are completely unaware of?”

Eido Gal, founder of Riskified, said his company has seen a trend this year in its clients looking to optimize their current fraud-prevention teams and techniques rather than expanding their teams and implementing new strategies. Gal and Ferguson agreed that one good way to optimize your manual review team is to measure not only how many fraudulent transactions they allow, but how many transactions they prevent from going through. Anyone can turn down every transaction to prevent fraud; the best reviewers do that and also allow the most legitimate sales.

The panel touched on several recent trends in fraud over the past year, including ship-to-store and mobile scams. Paulson pointed out that customers expect companies to have certain controls in place, such as asking for ID, in ship-to-store transactions, so he recommended stores follow through on those controls. Gal noted that mobile fraud is still young, since mobile itself hasn’t really taken off yet. But as it becomes more popular, all three panelists agreed merchants will need to be creative in using other data on a phone that can authenticate a customer, such as confirmation texts and emails.