PRESS RELEASE: 3 Techniques You Can Still Implement To Improve Fraud Detection This Holiday

Sarasota, FL, November 4, 2013 / By: David Montague, The Fraud Practice LLC.


It is that time of year again, the holidays are almost here, and merchants are finalizing their preparations for the holiday selling season. The holiday season not only brings increased traffic and sales volume, but also increased fraud attempts. Fraudsters know that organizations are often overwhelmed during the holiday rush and will try to get more fraudulent orders through during times of peak volume. For this reason, it is critical for merchants to have in place an effective fraud management strategy to catch fraud activity as early as possible. Of course it is a little late in the game to try and implement a new risk strategy at this point, but there are techniques available as software as a service (SAAS) you can put in place now to improve your capabilities in manual review.


I am often asked at this time of year “what else can I do to prepare my risk team for the holiday season?” In response to that question I typically encourage good core training for risk staff as well as setting up online accounts to perform three complimentary authentication techniques in manual reviews. I recommend authentication techniques because they can be put in place with no coding or integration, they can provide actionable data in a real time setting and they are easily understood by manual review risk personnel. I recommend implementing more than one technique, because you need to have an escalation path if one method isn’t able to authenticate a consumer; you want your review team to have a secondary option – and that option should not be the same technique with just another data source.


For many merchants, the manual review is the last line of defense to catch fraud, and the last opportunity to try and avoid turning away a good customer. Manual reviews during the holidays can be very problematic for a number of reasons, notwithstanding the most obvious of which, the impracticality for many merchants to conduct manual reviews on such a large volume of transactions in a short duration. Manual reviews during the holidays are also problematic because they rely heavily on “people” skills to make the right decision on the risk of a transaction and many e-commerce businesses hire seasonal help each year to keep up with the increased volume in November and December, and this help typically has less expertise in fraud detection. In terms of the physical act of conducting manual reviews, reviewing the transaction details and performing link analysis are still at the core of any manual review, but during the holidays there is a stronger need and reliance on being able to authenticate and verify a consumer’s identity.


To maximize your efficiency in converting good orders while catching fraud you should ensure you have good tools for performing authentication and verification in your manual review process. This doesn’t infer you need them on every review, but you want them for those transactions where you don’t have enough information to make a decision. Think about it, what tools do your review personal have available to them? How many different tools do they have? We would encourage you to have tools in place to perform authentication from different data sources to ensure you have maximum coverage. Three authentication techniques to consider are: reverse lookups, email authentication, and identity document verification.


As a best practice organizations stay away from making large scale changes to their risk management operations or strategy just before the holiday season, as merchants want to make sure the program and tools in place are working effectively. But the following tools and services are worthy of consideration, even with the holiday sales and fraud attempts soon to reach peak volume, as they can provide uplift both in terms of the number of transactions staff will be able to review and the quality of manual reviews.


One option is for an e-commerce merchant to setup access to an identity authentication vendor for performing reverse lookups on a manual basis. In a reverse lookup you input a data point such as an address, and the service will tell you about every identity it has associated with that data point. While many organizations may already use Match/No Match results from phone and address lookups as part of their automated screening, performing manual lookups with reverse lookup tools to see what other information is associated with a name, number or address can find connections and other data points to explore which may provide the evidence to decide whether or not to approve or decline a transaction. Often because of cohabitation and multigenerational households the connections of names or phone numbers to an address are not so straightforward, but performing a manual reverse lookup can enable review agents to make the connections thus converting more orders. In short, reverse lookups allow for more subtle connections in authentication, as well as providing a means to determine the quality of the connection, or lack thereof.

During the holiday shopping season, the manual review teams at many major merchants rely on our consumer site, WhitePages.com, for reverse phone and address look ups. And while WhitePages.com is the definitive source for contact information on the web, it is very clearly designed for consumers, not businesses.

With our business-focused product, WhitePages PRO, merchants often speed up the clearing of flagged transactions by 20% or more because they get richer data, a better user interface as well as an ad-free experience. Tom Donlea, Director of Risk Services WhitePages, Inc.


While a phone number or address can show strong connection to a name and other information through contract agreements, public records and other sources, it can be much more difficult to establish or confirm identity information with an email address. This is primarily because emails can be created quickly, easily and usually at no cost to the consumer. Most all merchants operating in the eCommerce channel collect the email address, at least as a point of customer contact, but this data point can be used for risk screening, email authentication, and review as well.


There are a number of ways to authenticate an email to include, its age, its operational status, its association with past negative, or positive, activity as well as its associated social profile. Keep in mind while an email address can be created with no cost and little effort, an email address that has a social media presence is much more difficult to fake. There are a number of vendors in the market today that provide email authentication services. Vendors can offer straight look up capabilities to more sophisticated synthetic profiling based on the demographic and descriptive data associated with that email and connected social media accounts.


Like reverse lookups, email authentication can be used in automated screening as most services provide some type of email risk score or indication of the associated risk. But a lot of information about an email address can go into creating that score, and as a manual check agents can review some of this detail but have a quick “score” indicator of risk simplifying the level of experience required to make use of the technique.


Anyone that has done manual reviews has experienced cases where after checking various data sources and investigating multiple user provided data points there is still not enough consistent information to feel comfortable accepting the sale. You don’t have a strong reason to kill the transaction, but your gut tells you something is off. A good last resort technique to have available is to try identity document authentication and verification to convert the sale if all else fails. This includes verifying an identity document, such as a driver’s license, national ID card or passport, or even verifying possession of the payment card. These types of services are available in the United States and internationally.


During the holidays you always have those orders where you can't authenticate the consumer's name phone or address and in those cases you have 3 choices: you can take your chances with the order, you can reject and walk away from a potential sale or you can perform identity document verification. With IDchecker the customer experience is very seamless allowing the consumer to take a picture of their identity document with their cell phone. Michael Hagen CEO | Founder IDchecker



Identity document authentication and verification checks require extra steps on the part of the consumer, and for most low-to-medium risk industries they wouldn’t be used for every transaction. But for transactions that an organization just isn’t sure about, or even ones that point towards being higher risk but the organization wants to give it every chance to convert, than these strong verification techniques can be applied.


With the holiday season quickly approaching I know you are focusing on your final adjustments and seasonal hiring to prepare for the increased volume and fraud activity, but if you are asking yourself “what else can I do to prepare my risk team for the holiday season?”; I would encourage good core training for risk staff as well as setting up online accounts to perform at least two, if not all three, of the complimentary authentication techniques I have discussed in the article in your manual reviews. If you would like to learn more about the vendors offering services in these techniques email us at questions@fraudpractice.com.

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