In Conversation with Ekata and Click Frenzy at Australia’s iMedia Online Retail Summit, 2022.
If anyone knows the power of preparation ahead of a busy sales season, it’s Grant Arnott, the cyber-sale pioneer behind Click Frenzy. Ekata’s James Sibbick sat down with Arnott at the iMedia Online Retail Summit. Together, they asked the room: is your fraud team ready?
During the peak holiday shopping season in 2021, Scamwatch received over 26,000 reports of online shopping scams – more than the total reported through all of 2020. Arnott calls these sales a “fraudsters paradise.”
Ranked as a top reason globally for operational and revenue losses, account takeover attacks increased by 148% in 2021. Driven by identity theft, online payment fraud losses are expected to exceed $200B by 2024.
Meanwhile, 49% of ecommerce businesses across the globe have experienced a rise in promo abuse since mid-2020. Worse still, 42% of organisations allow customers to abuse promotions. The effects of this insidious scam are often immediate; distorted customer acquisition metrics, possible out-of-stock situations, and a blown marketing budget.
The checkout process is another bot-attacking beast altogether. In fact, despite a global growth rate of 41% of bot attacks in 2021, APAC experienced an attack surge of 86%. This included platforms indiscriminately being targeted by fraudsters hacking into trusted user accounts to access card-on-file and make large purchases.
Strategic Friction: Striking a Balance
As Arnott explains, when you are offering an amazing deal, checkout needs to be an onerous process.
“The goal is to offer a fast and easy checkout but with such sophisticated bots, the process needs to be manual. If you are going to get an iPad for $3 you have to expect to answer some questions and (wait for) verification.”
Arnott likens this process to a treasure hunt; asking questions of your customer and then manually verifying the answers. He acknowledges that abandonment does happen. In a global survey, 57% of Australian shoppers stated that they discard their carts some, or all of the time.
Still, Arnott explains that shoppers do understand that hoops need to be jumped through to get a deal.
“It’s a huge balancing act – managing fraud and a seamless transaction that doesn’t deter the customer from making a purchase.”
At Ekata, we use the term “strategic friction.” This means deciding where and when friction is required in a workflow and determining your approach from there.
Choose the Right Tools
A recent Ekata survey found that 70% of companies used three or more tools to help make this incorporating-friction-process smoother. Companies should automate transactions to speed up the process. They should also layer in a validation method and add authentication tools for higher-risk transactions to increase friction for fraudsters. Finally, when necessary, they need to manually verify information at the bottom of the flow. Sounds so simple, right?
Remember, no single solution will solve all of your problems. First, decide where your vulnerabilities lie. Is it at the check out? Or sooner, at account opening? The right partner will help analyse your data to steer you in the right direction.
Keep in mind the limits of manual review. Research, commissioned by Ekata, found that merchants who rely solely on manual fraud prevention techniques to combat fraud may one day find their losses from false declines outweigh any savings. For example, false positives cost merchants upwards of $450B in revenue – and as much as 20% of rejected transactions are, in fact, legitimate.
It’s important to seek a way to optimise both your internal and external resources. This hybrid approach of AI and human expertise is especially important during intense holiday sales periods. An easy to use tool that transforms customer information into a clear to read, data-driven analysis – fast – is your ticket to success. For example, an Ekata customer could seamlessly integrate our APIs within their ML models for instant automation. Simultaneously, they could leverage our identity review solution Pro Insight to facilitate the work of the manual review agents. This enables them to assess identity risk and approve good transactions.
Want to speak more of your particular needs as we head into the holiday season? We are here for you! Get in touch with our fraud specialists.