How important is the human element in an online fraud management strategy? It’s no secret that manual reviews slow down transaction times creating friction for your customers, but that doesn’t mean they should become completely obsolete. A holistic fraud management strategy should be a well-oiled machine that aims to reduce friction, approve more transactions, and stop fraud. That machine should be a combination of automatic identity checks, risk assessments, and an amazing manual review team.

Maybe building a fraud management team has been low on the priority list, or perhaps you simply thought a fraud prevention team was unnecessary. No matter what the reason, it’s become increasingly clear that the need for fraud-fighting staff can’t be ignored. In 2018, mid-sized to large retailers faced an unprecedented 1,500 fraud attempts per month, with more than 500 of those being successful on average. These successful attacks had a true cost of $3.20 for every one dollar of fraud. Now is the time for retailers to begin assembling their fraud management teams ahead of the busy holiday shopping season. So, what should you look for when hiring your crew?

Finding the right candidates

Hiring a successful fraud management team, like any recruiting endeavor, is not an easy task. Before you can begin reviewing resumes for potential candidates, you’ll need to know what qualities and experience you’re looking for in your all-star team.

There are two different approaches that large retailers can take when setting up their online fraud management strategy. The first step is deciding where fraud lives in the organization. Does it live with customer service or does it live with payments and operations? This first question will have a significant impact on what kind of candidates you’ll look for when recruiting.  In addition to where on your org chart this team will live, you will need to consider what systems for review and verification your teams will have access to. We’ll cover this aspect later in this piece.

All fraud management team members should possess an analytical skill set, be detail oriented, and be able to spot anomalies in transactions.

Customer facing fraud managers

For some retailers, fraud management lives with their customer service teams. Fraud management within customer service is particularly common when manual reviews involve requests for identity verification in the form of phone calls and emails. For example, for some merchants, a transaction flagged as suspicious may go through an identity verification phase where a member of their fraud management team reaches out to request a photo of the credit card and ID of the customer to prevent CNP fraud.

These fraud teams need a special set of skills to be able to navigate both the review process and the customer service process. The following attributes should be prerequisites for any candidate joining your customer-facing fraud management team:

  • Impeccable communication skills (verbal and written)
  • Experience working with customers in difficult situations for an amicable outcome
  • A proven ability to multitask – these agents are likely to be working multiple manual reviews at the same time
  • Quick and efficient workflows
  • An eye for detail with experience validating documents and identification data

Manual reviews are notorious for causing friction for your legitimate customers. The good news about this particular approach to them is that the right fraud management agents providing excellent customer service while conducting investigations can reduce friction and save customers which might otherwise be lost. Instead of feeling like they’re being interrogated, these agents can actually make legitimate customers whose transactions are flagged feel like your company is actually looking out for their best interest, protecting them from fraud. These warm and fuzzy feelings can be critical to maintaining the customer relationship during the validation process.

Loss prevention and operations analysts

Some retailers choose to house their online fraud management teams within their loss or operations departments. These teams often rely more heavily on automation or prescreen applications in an effort to reduce the number of reviews their teams handle. Therefore, these teams need to be more analytical and less customer service oriented.

For teams that live within the operations or loss prevention departments, the following qualities should be part of any job posting:

  • A background in analytics or big data
  • The ability to quickly and efficiently work through a queue of requests with a low margin of error
  • Experience with fraud or financial crimes
  • Pattern recognition and the ability to quickly spot anomalies
  • Experience with machine learning technology and fraud trends

The most important factor when building a retail fraud management team that lives within operations or loss prevention is an analytical brain and an investigative spirit. Hiring managers should look for candidates who are truly interested in diving down the “rabbit hole” of investigations. The right candidates will want to not only stop fraud attacks and malicious transactions but also look for trends and the tools to prevent them from happening in the first place. Since these analysts are not customer facing, they have more time to wrap their minds around a review and can worry more about improving processes than reducing friction through direct customer interaction.

The unseen teammate

While looking for the right candidates to staff your fraud management team is crucial, equally as important are the systems in place those people will be working with. All retailers should take a proactive, holistic approach to fraud prevention that includes some level of automation. Without automation in place, your team will need to manually review every single transaction which is inefficient and time-consuming. Additionally, this approach will add friction to transactions that could (and should) be easily and automatically approved for known good customers.

Manual reviews are not only time-consuming and frustrating, but studies show that if a transaction is flagged for manual review an analyst will approve it 82% of the time demonstrating that most of these manual reviews don’t need to occur.  False positives cost not only time and money but also customers. Lost revenue from false positives cost retailers $118 billion in 2015 alone and studies show that customers who abandon a transaction due to frustrating reviews spread that message faster and wider than customers who have positive experiences. The best way to circumvent these costs is to deploy automation and fraud detection early in the process.

Hiring the email address

Nearly every transaction, account opening, and application online today requires an email address to proceed, making it one of the single most important pieces of data that you can use to stop fraud before it begins. Utilizing automation like our Email Risk Score, anchored with the power of the email address, to review transactions for fraud indicators and known fraudster behaviors will allow your system to automatically approve more transactions while sending only the most suspicious orders to your manual review team.

Automatic approvals immediately reduce friction by preventing your best customers from having to encounter additional checks or customer service agents. Flagging the transactions with the most risk indicators ensure that your newly formed dream team is only reviewing the orders most likely to be fraud, allowing you to catch and prevent more. Combined, more approvals and more streamlined reviews boost top-line revenue while stopping bottom line loss.  

In conclusion

E-commerce fraud prevention is a multifaceted issue that requires a layered approach. Whether your team is composed of analytical superheroes or superb customer service agents, they need the right processes and tools behind the scenes to be as efficient as possible. Stop unnecessary manual reviews and fraud loss by combining the right human element with the right automated solutions.

Click here to discover how you can leverage email intelligence to stop fraud, approve more transactions and drive revenue.