No Genies Necessary: Three Wishes a Successful Fraud Team Grants

Andrew Canfield | August 22, 2019

My four-year-old daughter is into Shimmer and Shine, a delightful children’s television program about genie sisters named Shimmer and Shine granting three wishes per day. Occasionally, the sisters need to use their wishes to thwart their archnemesis, a sneaky sorceress named Zeta. By the end of the episode, Zeta is put in her place and all is back to normal again in their magical homeland of Zahramay Falls.

Like Zeta, at times it feels like fraudsters are using sorcery and getting away with it. If, however, there is a fraud team in place executing a well-defined strategy, having some genie-sisters around won’t be necessary to keep fraudsters at bay. In fact, a successful fraud prevention strategy can empower the team to grant these same three wishes every day.

Boom Zahramay! The Three Wishes…

The first wish a fraud team grants every day is the identification of legitimate customers. Good customers should experience as little friction as possible. Doing so increases customer satisfaction, retention, and lifetime revenue. When risk systems identify a good purchase attempt as fraud, otherwise known as a false positive, this leads to undesirable consequences. This friction not only means an immediate loss of revenue, but it also reduces customer satisfaction, and can result in the loss of future purchases due customer abandonment. An effective fraud prevention strategy strives to minimize false positives as much as possible.

The second wish granted is the most obvious one: a fraud team identifies fraudulent activity and acts to stop it. Fraudsters understand that bypassing fraud systems means they need to look and act like legitimate customers.  An effective fraud team knows how to identify the nuances of fraudulent and legitimate orders. Failed efforts to mitigate fraudulent attempts means the legitimate payment instrument holder will chargeback the purchase.  The undesirable consequences of chargebacks are sale reversal, loss of product, and fees for processing. It’s a magic carpet ride to be avoided if possible.

Protecting the brand’s reputation is the third wish a fraud team grants every day.  When legitimate customers have a positive experience in an approved channel, those same customers will return to that transaction platform for future purchases.  This prevents those customers from navigating to unapproved third-party sites:  the storefronts where fraudsters are likely to resell stolen or counterfeit goods.  Since these customers already formed opinions about the products, services, and merchant, keeping them in approved channels provides the best combination of safety and experience.

Additionally, if the product is a service, keeping fraudsters off the service means more available resources, bandwidth, uptime, and responsiveness for legitimate customers.  Keeping those customers happy with uninterrupted service augments brand satisfaction.

Wish Granted!

Just to be clear, wish-granting creatures aren’t necessary to prevent fraud.  A team of fraud analysts aligned around a strategy to protect legitimate customers and identify anomalous activity will suffice. A solution provider specializing in fraud prevention needs to understand the balance between customer satisfaction and fraud prevention. Acting on that understanding leads to increased revenue and a stable brand reputation, regardless of which form of sorcery fraudsters are using.

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Andrew Canfield

Andrew Canfield