Having an effective fraud management strategy for your business is critical to your bottom line. But you also need to understand how the fraud prevention decisions you make will affect your customers, operations, and brand. An effective fraud management strategy can positively impact all facets of your business. There are four ways that fraud management is vital to your organization.
Here is what you need to consider:
How much does fraud cost your business? The importance of fraud management.
While fraud has been a growing problem for years, it became worse during the pandemic as more consumers conducted business online. Once you understand how fraud impacts your businesses financially, you can determine the best fraud management strategy to help your company. When evaluating, it is critical to find a solution that helps you the following ways:
1. Prevent revenue loss
Let’s face it – for retailers, one of the main issues facing them today is refunds abuse and is quickly becoming a major area of loss for large retailers1. Refund abuse fraud differs from returns abuse because the bad actor requests a refund or a replacement by claiming they never received the delivery.
This growing problem is costing merchants in more way than one, especially in the form of unprofitable customers with excessive returns. It is important to understand the size of this problem at your organization and to ensure a fraud management strategy and returns abuse solution that provides the insights necessary, monitor, measure, and take appropriate action to prevent future abuse.
By harnessing the power of community data to verify a new customer’s trustworthiness and determining whether their email address, device, credit card, or other details have been used at another retailer, can help you identify if a new customer is a potential abuser and in turn minimize your risk and improve the experience for your best customers.
2. Control operational costs
Additional manual review should be avoided since an operational cost for the merchant may mean they need to find a solution that allows them to use policies and machine learning to reduce the manual effort of fraud management.
An example of this working successfully can be seen with our client Guitar Center who decreased the number of orders that required manual review by 10%, even though annual online sales increased 21% in 2020.2
3. Provide a positive customer experience
Balancing fraud management and the customer experience is a challenge for many organizations. According to a recent study,3 53% of online merchants prioritize fraud prevention over user experience. The potential downside of this practice is you could create excessive friction for customers, resulting in frustrated shoppers and decreased sales.
When selecting a fraud management solution, it’s important to choose one that prioritizes both fraud prevention and user experience. Not only will this type of solution flag fraudulent transactions, but it can help also expedite orders for legitimate customers.
4. Prevent damage to brand and reputation
Incidents due to fraud can damage a company’s reputation. It will be key for a merchant to find a solution trusted by the biggest brands in the world, allowing them to harness community data and avoid unnecessary risk.
How will fraud management transform your company?
Now that you see the benefits of an effective fraud management strategy, just imagine its impact on your organization. It can help customers become increasingly loyal, spending more at your business.
As former in-house fraud and risk managers, our team of experts understands the pressure you’re under to address the sophisticated and ever evolving threats your organization faces daily. We have built an industry-leading platform underpinned by machine learning, device intelligence, and user behavior analytics to prevent fraud and abuse while helping to maintain and grow your relationships with your best customers.
If you need help implementing a fraud management solution, trust the experts at Accertify. We offer a comprehensive platform that not only addresses today’s threats but uses sophisticated technology and community data to detect tomorrow’s threats too.
The Accertify team consists of former in-house fraud and risk managers who understand the pressures you are under to prevent fraud. They can help you address the cyber threats your organization faces daily and develop a fraud management approach that makes it simpler to protect your organization while delivering a seamless customer experience.
Want to learn how to implement a comprehensive fraud management strategy for your organization? Contact us to request a consultation.
Sources
1Resource Centre https://apprissretail.com/resource/2020-consumer-returns-in-the-retail-industry/
2Client data 2020 – Guitar Centre https://www.accertify.com/case-studies/guitar-center/
3Forbes, 23/09/2021 Customer Experience Impact Tops Losses As Retailers’ Number One Fraud Concern https://www.forbes.com/sites/jordanmckee/2021/09/23/customer-experience-impact-tops-losses-as-retailers-top-fraud-concern/?sh=7aabd922625d