Your Legacy Fraud Solutions Are Killing Your Growth

Today’s fraud landscape extends well beyond payments and financial transactions, but most fraud prevention solutions – particularly the ubiquitous legacy tools so many businesses utilize – aren’t equipped to handle the ever-evolving issues organizations can’t afford to ignore.

In our webinar featuring guest speaker Andras Cser, VP Principal Analyst with Forrester, Leading the Digital Trust & Safety Transformation: How to Increase Revenue and Customer Happiness without Risk, I sat down with Forrester’s VP Principal Analyst Andras Cser to discuss why legacy fraud solutions are obsolete, and how Digital Trust & Safety strikes a necessary balance between fraud prevention and strengthening the customer experience.

Out with the old…

According to Forrester, most legacy fraud solutions are geared toward protecting payment transactions, making them ineffective at addressing new fraud issues plaguing companies today, like account takeover (ATO) and content abuse. This is especially problematic given the rapid growth of non-financial fraud in spaces like the travel and dating industries and online marketplaces, where everything from loyalty fraud to romance scams and fake listings run rampant. Fraudsters will try to exploit any customer-facing service where there’s money to be made.

Forrester recommends that businesses have a “360° view” of transactions and identities to get a clear picture of consumers and their behaviors, which legacy options don’t provide. Ideally, your solution should be able to analyze:

• User navigation patterns: How does the user typically type, swipe, or move their mouse?
• User IP address
• New devices/device IDs: This would also allow for spotting devices/device IDs you’ve seen before and recognize as fraudulent
• Profile updates: What changes did the user make (password, payment info, email address, etc.) and how many happened all at once?
• User self-service changes: Password reset, username recovery (fraudsters attempt ATO via these methods)
• Payment method and order: Did the user buy many of the exact same item?

Having greater insight into individual users and their behaviors reduces the amount of friction that needs to be introduced into the customer journey for all users. But many companies are still relying on obsolete solutions that introduce the maximum amount of friction into the customer journey – and they plan on continuing with business as usual.

Last fall, Sift surveyed 500 leaders of digital businesses responsible for growth and operations; ¾ of them prioritize frictionless experiences, but ⅔ admit that their solutions block good users and 90% of them said they will continue to invest in the same tools and processes that have introduced friction into their customer experience.

The status quo isn’t working, and businesses that stay stuck in their old ways risk getting left behind by customers that are tired of being treated the same as bad users.

…In with the Digital Trust & Safety Mindset

Many businesses that are transacting online (especially those that are not digital native organizations) are operating with the loss prevention mindset that brick-and-mortar businesses have, which is to say they’re focused entirely on preventing fraud losses and not concerned with creating positive customer experiences. But digital natives understand that the key to success and growth isn’t just reducing losses, but reducing friction for good users – and they’re performing better for it. Doing digital business means operating under a new model for growth, which follows the customer journey:

1. Customer creates account
2. Customer logs in
3. Customer makes a purchase
4. Customer leaves a review and refers a friend

However, each step of the journey poses a different risk. A new account could be a fake account that will be used for fraudulent activities; that log in could actually be a case of ATO; a purchase could be made with stolen credit card information; and a review could be fake or a vehicle for spams and scams. Every step is an opportunity to increase conversion rate and accelerate growth, but also a risk of introducing friction for customers with every fraud countermeasure that you implement.

So how are you going to win? You can’t if you’re using legacy solutions that kill your growth.

The answer is Digital Trust & Safety, a philosophy built on the belief that fraud prevention and positive customer experiences aren’t mutually exclusive – they’re two sides of the same coin.

Sift delivers Digital Trust & Safety to our customers based on our foundation of Technology, Community, and Partnership.

• Technology: The Sift Engine, powered by machine learning that lets us instantly detect fraud
• Community: Our strength in numbers. We have the largest global network in the industry thanks to the knowledge of the over 34,000 apps and sites using Sift. We also bring together colleagues throughout the industry at our Fraud Fighters Forums, where we exchange best practices and tips from the front lines of fraud fighting
• Partnership: Our Trust & Safety Architects are dedicated to working with our customers to ensure they have the best processes and organizational structure to fight fraud and maximize growth

The results of adopting this mindset speak for themselves: 80% of Sift customers have seen a reduction in chargebacks, 60% have seen a reduction in spam and scams, and they’ve experienced a 2x increase in accepted order volume, thus growing top line and reducing losses.

Fraudsters and good users aren’t the same people – it’s time to stop treating them alike

Per Andras, Forrester recommends that “businesses use only as much security as the risk justifies,” to make customer experiences as frictionless as possible for good users and reduce customer insult by profiling customer behaviors and “applying them across channels to leave good customers alone.” Fraudsters aren’t going to wait for legacy solutions to implement the features they’ll need to provide this balance of security and user satisfaction – but Sift is ahead of the curve, and ready to stop them in their tracks.

To learn more about making the Digital Trust & Safety transformation, watch our webinar with Forrester.