Our #fraudlifecycle series of blog posts intends to inform our audience about trends, challenges and strategies of addressing fraud. Make sure to follow the #fraudlifecycle conversation here and on Twitter at @41stParameter
In last week’s post we explored the topic of authentication’s role in a world of emerging technologies. This week, we chose to delve into the evergreen question: what is the best balance of authentication in fraud prevention?
Today’s multi-device landscape promotes a number of different ways to complete online transactions. While this has prompted the number of online transactions to grow at an exponential rate, it also has instigated greater opportunities for fraud to occur. The key to enabling top-notch fraud prevention as fraud events escalate is to strike the proper balance of authentication. Here are some key points of view on the subject taken from our most recent webinar.
The Answer Is In The Data
There are many factors to consider when determining this balance. Michelle Brisby, senior fraud manager with Sephora Direct, said that the amount of authentication really depends on the business that it supports. She notes the differences between shipped goods merchants and digital merchants. Shipped goods allow for more time for verification prior to actual shipment, whereas in the digital realm the authentication process needs to happen immediately. But business categories aside, Brisby noted that knowing the data and understanding how to leverage the fraud tools in the transaction process is a sure-fire way to reduce false positive rates and ensure a good and memorable client-customer experience.
Dave Britton, from 41st Parameter, a part of Experian, agreed with Brisby’s point about the amount of authentication correlating to the business category. “At 41st Parameter we often discuss the attack rate against a business. Every business has a different attack rate. Part of that’s driven by the types of goods being sold and part of that’s driven by the methods of sale. It can even be shaped based on geography,” said Britton. He explained how this rate is important to cultivate and is calculable by comparing blocked fraud rates to what was lost. Britton maintains that this data-centric method is a sound way to balance authentication with the customer experience.
Food For Thought
While data appears to be ever important in discovering appropriate authentication amounts, the progressing instant gratification expectation of the customer is beginning to pose a challenge in maintaining this authentication balance. Cherian Abraham from the Experian Decision Analytics team honed in on this potential balance rift. “There is a lot of data at your disposal to be able to knock out fraud. However, at the same time, the bar is set very high as it relates to customer experience in terms of how they expect the brand to behave with them as a consumer and to provide consumer fulfillment.” Abraham delved into the idea of newer technologies and how the modern consumer mindset is creating a gap in authentication balance. “Brands have to be very cognizant of the fact that they have the fraud prevention toolset today, but at the same time customer expectations around what brands need to be doing is slipping and further widening this gap,” said Abraham.
For more information and access to the full webinar – please click here. Stay tuned for additional #fraudlifecycle posts.