No Genies Necessary: 3 Wishes a Successful Fraud Team Grants

Andrew Canfield | August 22, 2019

My four-year-old daughter is into Shimmer and Shine, a delightful children’s television program about genie sisters named Shimmer and Shine. These genie sisters grant three wishes per day. And occasionally, the sisters need to use their wishes to thwart their archenemy, a sneaky sorceress named Zeta. By the end of the episode, Zeta is put in her place. Then all is back to normal again in their magical homeland of Zahramay Falls.

Like Zeta, at times it feels like fraudsters are using sorcery and getting away with it. If, however, there is a fraud team in place executing a well-defined strategy, having some genie-sisters around won’t be necessary to keep fraudsters at bay. In fact, a successful fraud prevention strategy can empower the team to grant these same three wishes every day.

Boom Zahramay! The Three Wishes…

The First Wish

The first wish a fraud team grants every day is the identification of legitimate customers. Good customers should experience as little friction as possible. Doing so increases customer satisfaction, retention, and lifetime revenue. When risk systems identify a good purchase attempt as fraud, otherwise known as a false positive, undesirable consequences result. This friction not only means an immediate loss of revenue, but it reduces customer satisfaction. This can also result in the loss of future purchases due customer abandonment. And it’s why an effective fraud prevention strategy strives to minimize false positives as much as possible.

The Second Wish

The second wish granted is the most obvious one: a fraud team identifies fraudulent activity and acts to stop it. Fraudsters understand that bypassing fraud systems means they need to look and act like legitimate customers. So, an effective fraud team knows how to identify the nuances between fraudulent and legitimate orders. If efforts to mitigate the fraudulent attempts fail, the legitimate payment instrument holder will chargeback the purchase. The negative consequences of chargebacks include sale reversal, loss of product, and fees for processing. It’s a magic carpet ride to be avoided if at all possible.

The Third Wish

Protecting the brand’s reputation is the third wish a fraud team grants every day. When legitimate customers have a positive experience in an approved channel, those same customers will return to that transaction platform for future purchases. This prevents those customers from navigating to unapproved third-party sites where fraudsters are likely to resell stolen or counterfeit goods. Since these customers have already formed opinions about the products, services, and merchant, keeping them in approved channels will provide the best combination of safety and experience.

Additionally, if the product is a service, keeping fraudsters off the service means more available resources, bandwidth, uptime, and responsiveness for legitimate customers. Uninterrupted service will keep those customers happy and ultimately lead to brand satisfaction.

Wish Granted!

Just to be clear, wish-granting creatures aren’t necessary to prevent fraud.  A team of fraud analysts aligned around a strategy to protect legitimate customers and identify anomalous activity will suffice. A solution provider specializing in fraud prevention needs to understand the balance between customer satisfaction and fraud prevention. Acting on that understanding leads to increased revenue and a stable brand reputation, regardless of which form of sorcery the fraudsters are using.

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Andrew Canfield