Chargebacks Aren’t the Only Fraud Problem In Town
By Sarah Beldo /
13 Aug 2015
Some fraud problems are Godzillas – they make a big entrance and take a giant bite out of your bottom line (I’m looking at you, chargebacks). But other fraud problems can sneak up on you, because their effects may be less obvious…though they can hurt your business just as much.
I’m talking about account abuse.
When I say “account abuse,” I mean all flavors of malicious and annoying behavior that come with fake accounts on your site or when users use their legitimate accounts for non-legitimate reasons. They could be scamming your good users or creating fake property listings to con unsuspecting people into handing over their cash. Maybe they’re setting up accounts for phishing schemes or spammy offers. Or they could just be trolls.
Here are 3 ways account abuse takes its toll:
1. User experience suffers
Imagine going to a cocktail party where one in every ten “guests” is just there to annoy you or try to sell you fake handbags. That’s how it can feel to visit an online community or marketplace with a spam problem.
The effect on your legitimate users? Well, the classic adage “one bad apple spoils the bunch” definitely applies when you’ve got people creating accounts and posting content on your site. Just a single bad experience could create bad feelings and sour someone on using your service.
Like a good cocktail party host, you have a responsibility to protect your good users from harm, harassment, and abuse on your site. If you’re putting user experience high on your priority list (and you should), tackling account abuse should be part of your game plan.
2. Your users move on to your competitors
In a highly competitive market, every user touchpoint is an opportunity to differentiate your brand from other companies offering a similar service. And when scammers and spammers abuse your site, it’s your brand that takes the heat as users take their business elsewhere.
A user who’s scammed or harassed can share their opinions with their friends and family, or with the public on social media – creating a bad PR snowball effect that results in lost users and lost business for you. When you think of a fraud-free site as a competitive advantage, it makes sense to proactively prevent bad behavior.
3. No time to grow your business when you’re busy policing spammers
Malicious users are like the gopher in the movie Caddyshack – cut off one access route to your site, and they’ll just pop back up again later. So what may at first seem like a manageable problem that you and your team can handle with manual reviews and community flagging can grow into a black hole of moderating, policing, and sifting through data to try and sort the good users from the bad. Sound like a great use of your time? We didn’t think so.
Not all of our customers are using Sift Science to battle credit card fraud and chargebacks. We have a growing segment who are using us to protect their good users before they’re taken advantage of, grow their user base, and increase engagement.
One of the benefits of using a machine learning-based model to address account abuse is that it learns in real time and gets smarter the more data you send it. That means you can block the bad guys from spoiling the experience while continuing to reduce friction for good users to sign up on your site. It’s a win-win for everyone (except for the spammers and scammers, of course…but that’s just the way we like it).