Online Retailer Uses New Fraud Detection Systems to Cut Fraud Loss Rates

A North American online retailer found that fraud losses ate at profits and affected customer experience. Their manual fraud management processes could not scale with the volume of its online and phone-based sales. As a result, its fraud professionals decided to implement a new fraud management solution. Unfortunately, the first solution didn't have a decision engine to create more advanced fraud detection rules to fight increasingly sophisticated fraud techniques. The retailer then implemented iovation and a case management system which allowed them to create advanced fraud detection rules and increase efficiency of fraud management functions within the department to review more orders faster. Without a staff increase, the team was able to absorb additional fraud related functions (chargebacks and collections) that other departments were previously handling. Managers could track fraud analyst performance with online reports which led to allowing them to work from home. The advanced rules, increased efficiency, robust user interface and analyst motivation resulted in a large reduction in fraud rates. Fraud losses dropped from a peak of $2 million to $180,000.