PRESS RELEASE: The Impact of Manual Reviews on Your Customers and Brand

Sarasota, FL, November 6, 2014 / By: David Montague, The Fraud Practice LLC

eCommerce merchants face the risk of fraudulent transactions all the time. They also face the challenge of knowing what their risk tolerance should be and often use fraud prevention tools to help identify high risk transactions. Even with fraud tools in place the decision to either accept or reject isn’t always clear and may require human interaction; or what is termed a “manual review”. Not all merchants are able to support manual reviews as well as not all merchants have the expertise to conduct effective reviews. Making use of manual reviews is about saving sales just as much as it is about catching fraud, so it is critical to have effective controls and people conducting manual review. Merchants have many options in the market to perform manual reviews in house or to outsource them, but at the end of the day merchants make use of manual reviews to avoid losses.

A lot of merchants attach a negative stigma to the “manual review” technique and lose sight of the purpose they serve. Consider the question: “How much fraud should the merchant expect and how should the merchant handle fears of accepting high-risk transactions?” Some merchants set their risk tolerance low and are fine walking away from higher risk transactions, and can avoid manual review programs all together. This lower tolerance for fraud means these merchants inevitably walk away from some good orders and most likely are losing some new potential long term good customers. If the implementation of manual review could allow for only a partial conversion on these good new customers, a merchant could see considerable increases in profitability, especially as they look at the total value of a customer over their lifetime shopping from the company. For this reason merchants should continuously evaluate the opportunity and potential return from putting in place a manual review program.


The eCommerce merchant may have options to better handle good customers often caught within the snares of a fraud prevention solution. The actual cost of establishing a manual review program does not mean the merchant must do this all on their own. For example, there are transaction guarantee service providers that can enable merchants to send only a fraction of transactions, such as a merchant’s high risk transactions, for final handling and disposition knowing they will be backed by a guarantee. In this case the merchant can remove not only their requirement to perform a manual review they can also remove their fraud risk from accepting a transaction.

Merchants not reviewing transactions should also consider the option to review small percentages of high risk transactions in lieu of canceling the orders on the front end system. The expanding payment systems and growing boundaries of ordinary eCommerce consumers are making fraud detection more difficult to catch; as well to verify on front end fraud tools. High risk orders may turn into good customers who are falling into grey areas filled with hard to validate credentials. For instance, consider the business or seasonal leisure travelers living in temporary locations outside of their home billing address. Fraud systems wired to cancel mismatched billing and shipping addresses could fall victim to automatic order cancellation. The offsetting cost to staff the manual review program will likely generate more in saved sales along with improved fraud detection.

COST OF FRAUD AND WHEN TO WALK OR HANDOVER THE RISK Merchants can weigh the option of instituting a manual review program by establishing a base understanding of current transaction costs. Some of these costs include the expenses to attract the customer to the site; along with the overhead to mitigate the transaction through the existing fraud solution. To properly assess the cost of fraud review, be sure to account for costs of any fraud tools/systems, operations, and ongoing technology teams to maintain the fraud management solution. The resulting cost on a transaction basis now introduces viable considerations of added costs to manually review some transactions.

Below are some of the items to consider when factoring the cost of fraud:

  • Transaction volume (count and value)

  • Cost of current fraud tools used

  • Chargeback costs

  • Fully burdened headcount costs for supporting operations