Build or Buy

CNP Session Room: Fraud Departments - Build vs. Buy One of the biggest decisions for a merchant is whether to go with a third-party fraud solution or to build one internally. A panel of fraud experts from 11 Main, Career Builder, The Source and New Balance shared their experiences and answered audience questions on Day 2 of the 2016 CNP Expo in Orlando, Fla.

An in-house solution is customized for your business and most likely will not incur an incremental cost per transaction. However, panelists noted, there can be technical expenses and resource shortages caused by continually reviewing rules and managing the system. And, as one panelist mentioned, they experienced high manual review rates when relying on an in-house solution.

Every merchant on the panel said they started with an in-house solution, but, as sales and fraud grew, turned to outside tools dedicated to identifying fraud. Jen Fogarty, trust and site security manager at CareerBuilder said, “If you can’t get those resources in house that you need to fight the fraud that you see, it may be time to look for an external resource.”

When it comes to determining which kinds of tools to use, Jared Houle, trust and safety manager at OpenSky said, “a strong rules engine is a good place to start, but may not be enough in the long term. Can your vendor support the future of fraud and what you will experience in a few years?”

Beyond cutting internal technical costs and adding additional manual review staff, added Greg Coles, director of e-commerce operations at The Source, “one of the biggest benefits [of using a third party for fraud prevention] was that it cut down on manual reviews and false cancellation percentages. That brand reputation damage that happens when a customer has to wait to have their order reviewed or it’s canceled incorrectly, is hard to quantify, but had an impact on our long term sales.”