Ecommerce / Retail
By: Kristan Frend I recently gave a presentation on small business fraud at the annual National Association of Credit Managers (NACM) Credit Congress. Following the session, several B2B credit professionals shared recent fraud issues The attendees confirmed what we’ve been hearing from our customers: fraudsters are shifting from consumer to business/commercial fraud and they’re stepping up their game. One of the schemes mentioned by an attendee included fraudsters obtaining parcel provider’s tracking numbers to reroute shipments meant for their B2B customer. The perpetrator calls the business’s call center, impersonates the legitimate business customer to place an order, obtains the tracking number, and then calls back with the tracking number to request that the shipment be rerouted. Often the new shipping location is a residential address where an individual has been recruited for a work-at-home employment opportunity. The individual is instructed to sign for deliveries and then reship merchandise to a freight company within the country or directly to destinations outside the United States. The fraud is uncovered once the legitimate B2B customer receives an invoice for goods which they never ordered or received. I encourage you to take a look at your business’s policies and procedures on handling change of address shipment requests. What tools do you employ to verify the individual making the request? Are you verifying who the new address belongs to? You may also want to ask your parcel provider about account setting options available for when your employees submit reroute requests. While a shipping reroute request isn’t always indicative of fraud, I recommend you assess your fraud risk and consider whether your fraud-related business processes need refining. Keep an eye out here for postings on these topics: known fraud, bust out fraud, and how best to minimize fraud loss.
-- by Heather Grover I’m often asked in various industry forums to give talks about, or opinions on, the latest fraud trends and fraud best practices. Let’s face it – fraudsters are students of their craft and continue to study the latest defenses and adapt to controls that may be in place. You may be surprised, then, to learn that our clients’ top-of-mind issues are not only how to fight the latest fraud trends, but how they can do so while maximizing use of automation, managing operational costs, and preserving customer experience -- all while meeting compliance requirements. Many times, clients view these goals as being unique goals that do not affect one another. Not only can these be accomplished simultaneously, but, in my opinion, they can be considered causal. Let me explain. By looking at fraud detection as its own goal, automation is not considered as a potential way to improve this metric. By applying analytics, or basic fraud risk scores, clients can easily incorporate many different potential risk factors into a single calculation without combing through various data elements and reports. This calculation or score can predict multiple fraud types and risks with less effort, than could a human manually, and subjectively reviewing specific results. Through an analytic score, good customers can be positively verified in an automated fashion; while only those with the most risky attributes can be routed for manual review. This allows expensive human resources and expertise to be used for only the most risky consumers. Compliance requirements can also mandate specific procedures, resulting in arduous manual review processes. Many requirements (Patriot Act, Red Flag, eSignature) mandate verification of identity through match results. Automated decisioning based on these results (or analytic score) can automate this process – in turn, reducing operational expense. While the above may seem to be an oversimplification or simple approach, I encourage you to consider how well you are addressing financial risk management. How are you managing automation, operational costs, and compliance – while addressing fraud?