Data insights for a whole new reality
Right now, nothing is certain. Every trend has been upended and organizing a new perspective is really hard. We know fraudsters won’t let a good crisis go to waste and there are important new tactics to respond to. And while our combined teams at LexisNexis Risk Solutions and Emailage, a LexisNexis Risk Solutions company, don’t have all the answers, we do have:
- A global data consortium that’s always gathering information
- Smart people watching closely and working to refine and understand the data
- Clients and teammates all committed to outsmarting fraud. Together.
Kim Sutherland, Vice President, Market Strategy, LexisNexis Risk Solutions, Harshad Agashe, VP Product, Emailage, a LexisNexis Risk Solutions Company and Jacqueline Hart, Sr. Director of Trust and Safety, Patreon participated in the CNP Virtual Summit Series.
The transcript below features their discussion and has been edited for clarity and brevity.
Why are data insights more important than ever?
Kim Sutherland: Data insights have always been important. What’s really starting to change is the type of data that people are looking at– and just the quantity of it. Also, from a consumer standpoint, what they’re willing to share or not share. In the past, it was very much a focus on names, addresses, phone numbers … more of the physical identity data elements that we were also accustomed to sharing. Now, there are some companies I work with don’t even know my phone number. They only have my email address. They don’t need to know my physical address because they’re not going to contact me because I’m only using digital goods. We’re having more people transact digitally. They’re starting to share different types of information than a company has never seen before. Because of that, the importance of verifying information and understanding when it’s accurate is really important. Are they who they say they are?
Harshad Agashe: One of the key things which we do is to identify changing behaviors. Product managers are responsible for adoption of products and actually nudge users to change their behavior. We normally see that happening over the years together. Just think about cell phone adoption, it took us fifteen years to do that. What we’re seeing right now is changes in behavior at an unprecedented pace. When we look at our customers data and how things are shifting, we see buying is changing rapidly. So in my opinion, it’s not just about having the data, but also how do you interpret the data? Even the way we’re interpreting that data is vastly changing. As you look at your data sources, think about how you want to change your interpretation of that data. It’s about data and insights.
There’s definitely powerful data insights available to merchants to help find fraud. Can you tell us a little bit about what you’re doing, at Patreon right now? And your take on how you’re using some of the resources available to you?
Jaqueline Hart: So at Patreon, we’re trying to plug in as much valuable information as possible to get a really good picture on who our customers are and sorting them out. The good ones from the bad, of course. But one of the issues we’ve had is false positives going crazy. And I know that when we’ve talked a little bit in the past with our partners at Emailage and LexisNexis, one thing that comes up is new customers who are new to us. But what we need to be able to sort out is: is this going to be our best customer or is it going to be a fraudster? So false positives, especially in this new environment, have become something we’ve had to contend with. Our volume, thankfully, has been high during this time with a lot of people being online. But we have to be able to get through in a very quick manner so that we’re not offending great customers on their first interaction with us. That’s the most important thing for us right now.
Kim Sutherland: There’s so many passive data elements that are critical too. And those can really help in preserving the customer experience. At the same time, trying to address those additional risk signals around the device, the location of the transaction, the timing of the transaction, the behavioral characteristics, all of those things are passive in nature. Those won’t necessarily have a negative impact on that customer. But at the same time, we’ll give additional intelligence to the company to be able to try to reduce those false positives. Combining both the passive inactive data elements in that decision is really an important step.
Harshad Agashe: When you have a customer-centric perspective, you see pretty quickly that these experiences really do insult customers — and they’re not going to come back to you. People are beginning to realize it’s very important and it shows up at the bottom line. The reason it took longer to get there is because it didn’t get defined fraud. Now, it’s easy because you see the impact. You see you’re losing dollars. You see social media feeds where people say, “Well, we had a problem.” That along with other channels where people express their displeasure and now you have a better view of the whole problem of false positives. Having as many signals as possible to have that balance of managing risk and customer experience goes a long way.
Kim Sutherland: The way organizations are addressing fraud has changed a lot over time as well. It’s very easy to just stop transactions. Like Jacqueline mentioned the insult factor, you could just turn away customers when things get risky. But that’s not the approach most organizations are looking at. They’re trying to figure out how they can create the best experience for their customers. How can they build long term relationships? Trust is a word that comes up over and over. So how do you build trust without eroding the brand presence — and at the same time address the fraud concerns. Balancing all three of those really changes the way organizations want to try to even deploy solutions to prevent fraud. After all, we know that the majority of customers are going to be good. So how do we pick out those bad ones?
How do you ensure your fraud strategy doesn’t develop a single point of view?
Kim Sutherland: In this time where financial risk is really really challenging to organizations, it’s really an important thing to be able to try to vet customers as quickly as possible and bring them through. That means you’re going to have to have multiple signals. At LexisNexis Risk Solutions we’ve really tried to look at things from a physical identity standpoint. Looking at the real person, in the real world is really important. But also look at digital behavior, the device aspect of an identity. It’s critically important for organizations to look at things from a 360 degree view like physical digital devices and behavioral. All of those things coming together will definitely reduce the false positive side of things.
But what else?
Looking at those holistically, you start to run into some real challenges just because consumer behavior is changing. So we see people now spending more time online and downloading mobile apps — which is really a great behavior.
Mobile apps tend to have lower risk than browser-based solutions. The challenge, however, is we’re seeing fraud increase in mobile apps, too. So just one change is not enough. This isn’t really a matter of now deploying additional capabilities, so your organization can handle mobile apps. Now you have to build in additional security features within that mobile app and take advantage of the ability to look at how the consumer’s interacting with the device, and with your web site, and organization and so on.
Harshad Agashe: As more people transition from physical to online commerce — where the concept of people having multiple identities is common sense … multiple emails, multiple phone number — and a common practice, companies are going to have to connect all of that. And they need to back it up to establish all the data that actually makes up one person. There’s a lot of work there just to understand risk in the transaction. But really it’s not just payment. It’s about managing reputational risk.
Tell us how you scaled to be a multi-faceted, data savvy fraud prevention team. And, what advice would you give to others to ramp their operations?
Jacqueline Hart: We’re all just one step ahead of the fraudsters at this point. The advice I would give to other people? Determine what’s the most important thing to you with a fraud system. If you are low average transaction volume (ATC) like us, then false positives are going to be a huge, huge problem for you. Or if it’s fighting chargebacks, you’re gonna do it in a very different way.
Also, pinning down what are the most important factors about how you do the work: like do you have teammates?
If you do have teammates, you can make your work a lot more efficient by managing together with the correct tools and process for your fraud strategy. But if you have no teammates available whatsoever and you’re just trying to make automated decisions, then you’re going to want to look at a tool that can give you the most signals so you can make those automated decisions. But this is really a bespoke decision that each person has to make for themselves after looking critically at their business.
What types of data insights are you most interested in as we look ahead to the second half of 2020?
I’m always excited in terms of looking into a crystal ball, especially when we can help influence the outcomes of it. Shared intelligence is going to be really important moving forward. You cannot just rely on source data, real insights are in shared information. Individuals tend to hold on to email addresses and phone numbers longer than any other type of data attribute. Those are going to be really important to understand. There are real- time dynamic ways to be able to share that information so that other merchants and organizations can make better decisions because you’ve shared that information. I think that organizations in this time of uncertainty are going to put more reliance on shared intelligence and they’ll be more willing to participate in a trusted sharing environment.
Jacqueline Hart: The pandemic and economic downturn will really color the next part of this year. We’re obviously seeing signs of that. We’ve got to batten down the hatches and share with each other as much as humanly possible, because, ultimately, you don’t have to be the best at fraud…you just can’t be the worst at fraud. And so the more you share with other people, the more signals and visibility you get.
When it comes down to it, people will scam on your platform. And, just because I might not find it to be super risky, I would still like to share with others so that all fraud professionals can plug the holes as best as possible.
Kim Sutherland: In times of recessions and economic downturns, there isn’t a direct correlation that says fraud is going to skyrocket. People aren’t all of the sudden going to turn bad who weren’t already bad before necessarily. All those different signals are going to just be really confusing organizations. We’re going to see changing behaviors and that’s what makes it really hard. And that’s why sharing information becomes even more important during these really strange situations that we’re going to be encountering for for quite a while.
Jacqueline Hart: I think fraud sharing makes such a difference. In the fraud industry, there’s a lot about how fraudsters work together and how fraudsters basically laugh about, “why in the world do merchants not work together?”
So the more we work together and stop fraud, it makes us as powerful as the fraudsters. It’s so much better when you’re collaborating and working together because you can get a leg up and stand on the shoulders of your neighbor. I may not be getting hit with a certain fraud trend, but I love talking to people that are in a similar industry and I can hear about what’s about to hit us. Then I’m ready for it.
So I’ve always been a huge fan and collaboration. It is your crystal ball, really.
Kim Sutherland: Jacqueline summed it up perfectly. Mic drop.