Optimizing fraud team performance during the holidays

With the holidays around the corner, those in charge of reviewing orders for fraud will have their work cut out for them. Not only are merchants expecting a dramatic spike in order volume, but Riskified’s historical data shows fraud on entry increases significantly during this period.

Caught between a rock and a hard place, some merchants feel declining a questionable transaction is safer and less costly than approving a bad order. However, if they would analyze the data, merchants might find they lose more revenue due to fear of fraud than to actual fraud.

A properly prepared fraud team can improve customer experience and help recapture revenue from borderline transactions.

Here are four steps to ensure optimal performance during the holidays:

Prepare your team for the holiday rush

Letting holiday shoppers wait several days or even several hours for order confirmation may result in customer frustration and increased sales for your competitors. To ensure you maintain adequate review times despite the sizable surge in incoming orders, it is important to know your team’s capacity.

Establishing guidelines for when analysts can independently handle orders vs. when they must seek a second opinion will help achieve optimal team performance even during the busiest of times. Keep in mind that an inexperienced analyst might be more apt to decline a high value transaction by mistake. Since turning away good customers will negatively impact their long-term goodwill and your bottom line, be sure to restrict not only which team members can approve orders, but also who is allowed to decline transactions.

Use smart technology to route fewer orders for manual review

Programming your systems to auto-approve orders can maximize efficiency. However, it can be difficult for a machine to interpret behavior, which is key to identifying legitimate transactions. Fortunately, you can program clues to help your systems distinguish friend from fraudster. For instance, did the buyer use a promo code, compare product features or read the returns policy? Were they referred via a digital marketing campaign? Fraudsters are not likely to engage in such online activities or to be found in your lead database.

Also consider creating new rules or adjusting existing models to reflect the unique characteristics of holiday shoppers, who eagerly wait for holiday sales, then splurge on big-ticket items and gifts for family and friends — often at the last minute. Combined instances of expedited shipping, high value purchases, international orders, and shipping/billing address mismatches — all of which might otherwise raise red flags — may be perfectly legitimate during the holidays.

Improve the efficiency and accuracy of the manual review process

Ideally, to avoid false positive declines, your system should only auto-approve, never auto-decline. The downside is an increase in manually reviewed transactions. To prepare analysts to review these transactions as quickly and accurately as possible, have them analyze past orders with long approval times to identify the hold-up and determine what data or tools were used to eventually approve the transaction.

The team should also review previously declined orders to see which of these could have been approved, and use the knowledge to accept similar orders. Riskified’s data indicates that 66% or more of declined orders are in fact legitimate and should have been approved. In other words, reducing decline rates could significantly boost your top- and bottom-line.

If an order is declined, have analysts note a detailed reason and communicate it to customer service in case they field a customer inquiry. Often times, a declined transaction can be approved with just a few additional pieces of information gathered by a customer service rep.

Have a strategy for international orders

International orders can significantly accelerate revenue growth. However, manually reviewing them is challenging due to time-zone differences, language barriers, unfamiliar data sources and use of unfamiliar local payment methods. If you don’t get many international orders, you probably haven’t invested in the technologies needed to validate these transactions. During the holidays, however, you may see an increase in international orders as non-domestic customers take advantage of U.S. sales.

To identify the key markets for your store, as well as your weak points, segment historical international transactions and fraud-related charge backs by country or region. To better handle these orders, familiarize yourself with local data sources in these markets (e.g., white pages, social media networks, etc.). If you’re planning to decline international orders because they aren’t worth the time and/or risk to approve, you might want to consider partnering with an outside company that specializes in validating high-risk orders.

Giving your fraud team and systems a pre-holiday tune-up now – whether by improving your existing assets or by outsourcing to experts — will not only protect you from fraud, but could potentially turn more declines into dollars and build customer loyalty as we head into the busiest shopping days of the year.

Eido Gal is CEO of Riskified

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