The boom in e-commerce and digital sales has opened the door for a rise in online malicious activities targeting digital companies. Some fraud actors specifically pick out organizations new to the digital space, such as traditional brick-and-mortar luxury retailers with high-ticket items.
Popular types of fraud include:
- Credit Card Fraud (cardholder not present)
- Shipment Intercepting or Missing Product (customers claiming that the package was not delivered or that the product was missing from the delivered package)
- Returns Fraud (customers returning empty packages and expecting refunds)
The increased anonymity that comes with digital commerce has allowed for the growth of fraud actors. Read on for best practices from luxury industry insiders who have gone through the growing pains of combating fraud during extreme digital growth.
AUTOMATED PREVENTION
Lean on Technology
Front-load your fraud risk at the beginning of the fulfillment process by leaning on technology partners.
add manual fraud check rules to your payment gateway
Payment gateways have native and customizable fraud prevention rules. Rules can block or hold transactions if credit card information doesn't match, or if a customer IP has a high number of declined recent transactions, or other risk factors. Payment gateways will block suspicious activity within your checkout authorization and capture flow.
integrate dedicated fraud prevention software
Dedicated fraud analysis software are also available in the market. These tools have algorithms or artificial intelligence to determine risk profiles for customers based on IP, recent transactions, and other information. These tools can be integrated within your order management flow. Fraud prevention tools also usually come with a chargeback guarantee that reimburses organizations for chargebacks related to fraud.
Utilize blacklists
Fraud actors will often repeat their malicious activities if they're successful. Payment and fraud integrations often have Blacklist capabilities - identify your business rules and use this feature!
SYNC LOGISTICS DATA
Partner with your logistics providers to provide as much data as possible so you can have a complete picture of any scenario. For example, shipping carriers like UPS have GPS technology to confirm where shipments are. Your logistics partners are also investing in technology to combat malicious actors.
Deciding between fraud prevention software? Check out the Fraud Prevention Software Comparison Guide
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MANUAL PREVENTION
Build Guardrails into Internal Processes
If you ensure your internal processes like fulfillment and order management communication are running properly, you’ll have a natural defense against malicious actors.
ensure fulfillment service levels have a high level of compliance
Review your fulfillment outbound and inbound processing times, and address inefficiencies with process improvements. Ensure your communication channels and cadences with relevant internal and external partners and customers also have a high standard of service. Even communicating incomplete information can be helpful to manage expectations for people waiting for an answer.
Guide to Business Process Re-engineering
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Build in cross-checks to mitigate human mistakes
During periods of high volume, fulfillment teams may make process mistakes. This happens even more when you have a seasonal business with many short-term seasonal employees and contractors. Reduce the risk by adding in automated checks and guardrails at multiple points throughout the fulfillment process to ensure human mistakes are prevented. This could take the form of: automated alerts in tools used by the team, manual checks as tasks shared across the team, and data analytics and KPI tracking.
Plan decision trees inclusive of all alternative scenarios
Customer-adjacent teams should have a standardized decision tree for how to handle all known fraud scenarios. Define the decision matrix, and educate your team on how to follow it.
Decision Tree Template
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ONGOING MONITORING
Leverage Data Analytics and System Automation
For ongoing monitoring, leverage system automations and data analytics to reduce reliance on manual tracking. Build in processes to alert relevant teams who can flag risk factors for fraud actors.
These automations could include:
- Analytics dashboards to slice and identify risk patterns
- Data platforms that track status of fraud claims, actions, and communications
- Automated penetration testing of relevant systems at standardized cadences
- Informational training platforms and alerts to keep teams up-to-date on latest best practices
Fulfillment Monitoring Templates
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