7+ Ways To Prevent Retail Fraud and Preserve Relationships

Copyright @ Accertify 2017. All rights reserved.
7+ WAYS TO PREVENT
RETAIL FRAUD
& PRESERVE
RELATIONSHIPS

accertify.com
MERCHANTS CAN TAKE A
SIGNIFICANT FINANCIAL HIT
FROM FALSE DECLINES
In 2014, U.S. card issuers falsely rejected USD $118 billion in transactions,
both card present and card not present, due to fraud suspicion1
By 2016, false declines reached USD $264 billion and continued to rise2
But potential customer lifetime value runs between
USD $3,600 and $48,0003
Actual fraud was only USD $9 billion1

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HERE’S HOW …
What happens when you falsely reject a customer’s card?
26 percent reduce shopping with a merchant4
32 percent stop shopping with a merchant entirely4
You need to limit losses from fraud and damage to customer
relationships, while controlling operating expenses
Fraudsters don’t just use one weapon to attack. Likewise you need an
arsenal to defend against them and enhance customer experience.

TAKE A
MULTI-
LAYERED
APPROACH
1

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THIS MEANS ...
You can’t rely on identity data alone
to authenticate customers
You should add layers for security
You need cumulative information from
several sources to assess fraud

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EXAMPLE
On your web site, use device intelligence
On your platform, include geolocation strategies
Then add a layer …
Collect information about operating
systems, configuration, browsers
Collect IP addresses
Identify repeat visitors or new customers
Compare with language and shipping
and billing addresses
Determine if information correlates logically

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WHAT YOU CAN DO …
Take a targeted approach to fraud
Choose layers relevant to your business
Use fraud strategies tailored
to your customer segments
and business channels

UNDERSTAND
DEVICE/
BEHAVIORIAL
DATA
2

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THIS MEANS ...
You need to interrogate the transaction
device to differentiate legitimate
customers from fraudsters
A jailbroken phone, a cross-border IP
address, or a laptop acting as though
it’s controlled by a bot can be signals
used to assess risk

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EXAMPLE
A user’s site navigation behavior
can be used to predict fraud
Information cut and pasted
instead of typed
Atypical cursor movement
Atypical checkout speed

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WHAT YOU CAN DO …
Install simple code to collect
information from a browser
or native app
Understand typical good customer
behaviors to recognize atypical
behaviors

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THIS MEANS ...
You don’t have to fight fraud alone
You can share transaction data
with a community of merchants
The more data you have, the more
confident you can feel about decisions

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EXAMPLE
A new customer shipping to a U.S. location
has a non-U.S. IP address
To you, she’s a collection of data points:
credit card number, email, IP address,
shipping address
But other merchants provide data about
legitimate transactions with her
If that combination of IP and shipping
address has been used successfully, you’re
more confident she’s not a fraudster

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WHAT YOU CAN DO …
Subscribe to a community of large
global merchants that run millions
of transactions annually
Access the power of the merchant
community

ADJUST
FRAUD RULES
& APPROACH
TO REFLECT
RISK
4

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THIS MEANS ...
All channels and products aren’t equal
when it comes to risk
You want to respond to threats
yourself, with a support team’s help
only when necessary
You need a platform that lets you
adjust rules on the fly

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EXAMPLE
You see the same IP address repeatedly
and suspect an emerging attack
An IP address from a telco like Verizon is less
user-specific than one from a cable Internet
provider like Comcast
You may want to adjust IP address velocity,
but not for mobile IPs
Your platform lets you respond to the threat
by customizing and changing rules yourself

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WHAT YOU CAN DO …
Ensure your platform lets you
apply rules unique to channels
and product lines
Control costs by making adjustments
yourself without pulling in tactical
resources

VERIFY DATA
WITH
EXTERNAL
PROVIDERS
5

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THIS MEANS ...
You have orders with data you’re
uncertain about
By using external services, you can gain
additional insight into questionable
transactions

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EXAMPLE
A customer places an order using
a different email address
You validate the email address with Emailage
Emailage provides email tenure information,
whether an email is brand new or years old
A tenured email may indicate a good transaction
A brand-new email could indicate
a suspicious transaction

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WHAT YOU CAN DO …
Work with a fraud protection group
with pre-integrated partners, like
Emailage, Whitepages and LexisNexis
Keep costs under control by being selective
about how often you use third-party verification
Use your rules engine to send only
transactions that reach a predefined
risk threshold

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THIS MEANS ...
Compile data for each customer, including
address, email, phone number, products
ordered and frequency of orders
By aggregating historical data, you can
make better fraud decisions

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EXAMPLE
A traveler buys a last-minute, first-class ticket
to London every Monday morning
Check the customer record to determine
if this is typical behavior
Your customer appears to be an
over-committed, under-organized
business person

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WHAT YOU CAN DO …
Build customer records to differentiate
behavioral anomalies
Use anomalies to help identify
fraudulent transactions

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THIS MEANS ...
You want to increase accuracy of fraud
detection, reduce customer friction,
and decrease manual reviews
Machine learning lets you assess
transaction risk based on how
different data elements and variables
correlate to fraud

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EXAMPLE
Machine learning can reduce how often you
need to update rules strategies and scores
It may uncover fraud patterns humans
can easily overlook
You get the best of both worlds
with a balance of rules and machine
learning models developed under
risk domain oversight

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WHAT YOU CAN DO …
Supplement your fraud strategy with
machine learning
Implement a nuanced approach to stop
emerging schemes, enforce brand policies,
and recognize and protect best customers
Also use traditional data, elements unique
to your business and human oversight

You’d like to drive incremental sales
from high-risk and/or declined orders.
Instead selectively send a subset of
transactions you’re uncertain about to
produce additional sales without paying a
premium on low-risk transactions.
But you don’t want to spend money
unnecessarily by sending all transactions for
review by Fraud Liability Shift (FLS) providers.
accertify.com
CONSIDER
CHARGEBACK
GUARANTEES
+

www.accertify.com
1
“Overcoming False Positives: Saving the Sales and the Customer Relationship,” Javelin, 2014.
2
“Chargebacks and False Declines: Cards’ Ugly Underbelly,” Aite, August 18, 2016.
3
Jawwad Farrid, “What is the customer lifetime value for MasterCard,” Quora, December 24, 2014.
4
“Overcoming False Positives,” Javelin.

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