To Cancel or Not to Cancel: Navigating Gray Areas in Fraud Review
By Michelle Arguelles /
5 Jul 2016
As part of your regular fraud review, you’ve probably come across a number of gray area cases. You know the ones. Sometimes, it’s a user with an odd email address and questionable social media presence. Other times, it’s a high-value order going to an unfamiliar international address. And there are always those times that your gut just tells you something is off even if everything looks good. Should you cancel…or not?
Here are some questions to ask yourself when you’re stuck in those muddy areas of fraud review…
1. How much risk are you willing to take?
Knowing the answer to this question can make the question of whether or not to cancel an order much easier. If your priorities are minimizing loss, even if it means customer experience or your sales suffer, you are probably going to be inclined to cancel more often when presented with a murky case. On the other hand, if maximizing sales and optimizing customer experience are your most important goals, you will probably want to accept more orders than you cancel.
For businesses with low volume but high-value items like jewelry, it makes sense to be more risk-averse. One bad order can mean significant loss, so you will want to review more and cancel if things smell even faintly fraudy. That might not be the case if you have a higher volume of orders that are lower value (like digital goods). If you are running a promotion or launching a new product that you want folks to adopt, canceling is not in your best interests.
2. What’s the story here?
IP and email addresses and device fingerprints can help you spot a lot of fraud very easily.
But be sure you are not becoming spoiled by the low-hanging fraud fruit. Take a more holistic view of the users or orders you’re reviewing, and look at more data points as needed. That could mean reverse address lookups or some social media stalking. And, frankly, don’t underestimate the power of a good ol’ fashioned Google search to help you find information.
As you look through more data, ask yourself “How could this be fraud?” or even “How could this NOT be fraud?” Are you looking at a fraudster running multiple cards and shipping to a strange address maliciously? Or are you looking at a student who recently moved across the country who’s trying to purchase something with his roommates? Fraud review sometimes turns out to be more art than science.
It helps to have a comprehensive tool for review like the Sift Science console that can help you visualize a user’s history and various attributes. Ideally, all the points you need to construct a story would be in one place, so you can make your final decision as quickly as possible.
3. What can you do besides canceling?
If you consider canceling the worst experience you can give your customer, then perhaps it’s best to take other actions before you begin canceling orders left and right. Start from the beginning. Consider the information you get on users/orders that you use in your investigations. The less information you have, the harder it is to make an informed decision. Examine what you’re missing and see if you can make that more easily available to you.
Do you have the capacity for extra review? Consider establishing an escalated review process. Have specialists dedicated to these more unclear cases so they can do things like follow up with the customer directly. You’d be surprised at how much something simple like a phone call can reveal.
Striking a balance
It’s important that you don’t swing too far in either direction of accepting or rejecting. Too much acceptance leads to lost revenue, while too much rejecting leads to lost customers. You will want to develop processes and policies that land you comfortably in between the two, depending on your tolerance for risk and capacity for review. Make sure you’re consistent, and keep customer experience top of mind.