For years, most businesses have treated fraud-fighting as synonymous with fraud mitigation. Fraud and risk teams are set up to keep losses down by manually reviewing transactions, figuring out which users are likely to be fraudsters and which are likely to be honest customers. The bulk of a team’s time is spent examining discrete customer actions such as clicking something on a page, putting an item in a cart, entering a shipping or billing address, and so on. They incorporate neither insight nor context into these analyses.
But it’s no longer enough for businesses to react to fraud after it happens, or to pile on an additional fraud solution when their current solution doesn’t catch everything. Fraudsters are too skillful, and customers are too unforgiving. Companies’ ongoing failure to build proactive systems to fight fraud as (and before) it happens has created a Digital Trust & Safety Deficit. Let’s explore how it happened and what you can do to start building a future-proofed, proactive business model.
This legacy approach to fraud uses rules-based systems or manual moderation to parse good users from bad. It’s a slow, inefficient, and clumsy process. And in many cases, the fraud has already occurred by the time fraud analysts have begun investigating. That means your customers have already been exposed to fake or abusive content, or they’ve already been ensnared by a phishing attack, or they’ve already suffered payment fraud — and they’ve probably complained about it on social media, too.
Businesses have sunk a great deal of time and resources into the legacy approach. Millions have been spent on an entire infrastructure built to clean up the mess after it’s happened: manual review teams, content moderators, customer service reps, chargeback investigators, and an organization that supports them and gives them resources. This infrastructure is devoted exclusively to reactive risk mitigation.
Risk teams have very little influence over revenue decisions. Their impact on a business’s bottom line is restricted to loss reduction. In other words, it’s reactive. More proactive ventures like business growth, product design, and new opportunities exist in a different silo. In the current ecosystem, people in these silos don’t communicate effectively. The product team builds the product, the marketing team markets the product, and the fraud team mitigates risk after the product comes out.
This infrastructure is outdated. Fraudsters no longer confine their goals to payment fraud or their methods to credit card scams. Today’s fraudsters are fast, sophisticated, and innovative; they’re free to collaborate with peers in the space, and they don’t have to worry about the same legal restrictions that fraud-fighters do. They’re building complex toolboxes and constantly iterating on their tactics. Today’s customers are also savvy, wary, and demanding. They want the best, and they’re quick to abandon businesses that don’t meet their expectations. These warring demands have placed an extraordinary responsible in the hands of today’s businesses.
By failing to build infrastructure suited to the challenges of the digital era, businesses have created a Digital Trust & Safety deficit. Unlike the legacy approach, which aims simply to mitigate risk, Digital Trust & Safety is a philosophy that aligns risk and revenue decisions. Rather than building an app, for example, and then fighting fraud on the app afterwards, Digital Trust & Safety bakes fraud prevention and customer satisfaction into the whole process: from product design to creation to sales and marketing. These teams collaborate throughout the entire product lifecycle so they don’t have to scramble to fight fraud after the product comes out. Digital Trust & Safety is a philosophy that spans the whole ecosystem: organizational structure, processes, and technology.
Fortunately, businesses can begin addressing the Digital Trust & Safety deficit today. To start, companies should make organizational changes by breaking down the silos between risk and revenue. Fraud, finance, and product teams should all be part of the same processes, working side-by-side to make decisions about product launches and resource allocation. Under Digital Trust & Safety, cross-functional teams have common goals and KPIs. Sharing information across teams allows businesses to expand more quickly and take more risks.
And perhaps most importantly, Digital Trust & Safety is proactive rather than reactive. Under the Digital Trust & Safety approach, businesses use innovative technology like machine learning and other automated tools to scale processes. These tools learn and adapt as fraudsters do the same. They examine user behavior across the customer lifecycle to find patterns in the data, learning how to stop fraud before it happens.
Digital innovators worldwide have begun hiring Digital Trust & Safety professionals and building Digital Trust & Safety into their processes and strategy. Facebook, Airbnb, Google, Twitter, Uber, Patreon, and other top businesses understand that it’s impossible to succeed without building the infrastructure to accommodate the challenges of the digital era. Each of these innovators is actively hiring in Digital Trust & Safety.
The good news is that it’s a lot less cumbersome and expensive to build Digital Trust & Safety infrastructure than legacy infrastructure. With the legacy approach, you must constantly add an additional layer of fraud prevention, build more rules, or hire more content moderators as your business grows. That’s not the case with Digital Trust & Safety. Once you have the fundamental structure in place, the Digital Trust & Safety approach becomes a self-building city. You just need to construct the first bridge.