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Clearsale Blog

The thin line on using Blacklists

By Clearsale

Clearsale Blog Posts

The thin line on using Blacklists

Of all the problems businesses face in the marketplace, fraud is one of the more complex. Although it may appear simple, it involves factors that are far harder to address than one might imagine.

For example, approval levels are essential for profitability, the more good purchases are turned down the lower the revenue and the greater the waste of marketing investments. Also important is the time for analysis. If all businesses had a month to check if a purchase might be fraud, accuracy would be extremely high, but the reality of online transactions is that results must be fast, if not immediate.

This gives rise to questions such as: What is best, a faster answer or deeper analysis? Creating automatic turn-down rules or keeping good customers from having a bad experience with the company? There are different perceptions regarding the decision to use the famous Blacklist as a fraud prevention mechanism. Used alone, this tool can also be a villain when it comes to the quality of assessing potential attacks.

The Backlist is compared to automatic turn-downs. Fraud comes in all shapes and sizes, and not always from an unknown individual or someone with bad intentions. For instance, we have what we call "friendly fraud". Your mother or other family member might use your data for an unauthorized purchase. Mismatch in some of the data could result in a turn-down and your name might end up on the Blacklist. Analyses using human sensitivity are able to detect the misunderstanding and continue with the transaction, and the customer will feel good and believe he or she had a good experience with the merchant.

Nothing ensures that this or that Blacklist rule will be efficient for long. Once a fraudster understands that the buying profile is being turned down, he or she will give up or switch strategies. This may have consequences such as losing more revenue that what would be lost as fraud, as good buyers on this list may be penalized for improper use of their data.

But what about good buyers? You might ask yourself who they are and why they would be harmed from poorly analyzed turn-downs. Who they are is easy! They always use their own data when buying online, and use credit cards that they own or are authorized to use. But what if you have been a victim of fraud? For instance, if your data - considered reliable by merchants -, was used without your knowledge or authorization. A Blacklist would not give you a chance to prove you are who you say you are.

Fraud solutions that use a large number of variables and market behavioral analysis are able to detect small details that can make all the difference in buyer experience and merchant profitability. A structured product that is fully tailed to solving your problem is one more item to pay attention to when contracting a fraud prevention partner. This gives you a broader vision of how your business might be attacked so that you can protect all flanks and keep your good consumers, which will certainly have a better and more fruitful buying experience.

It's like they say ... "it's too good to be true". Walking such a tortuous path as fraud requires attention and investment, focusing on health and steady growth of the business. A broader status score, keeping close tabs on fraud behavior in the market, efficient analysis rules, a fraud desk that includes careful human analysis, causing no friction in the process with the end consumer can go a long way to keeping your business off fraudster radars. These solutions not only keep fraudsters away, but keep them from coming back as they will never be able to easily overcome the hurdles in place.



A bit of background to understand how the Blacklist emerged

This term became public in the 1950s, when it was used by the US Senate House Un-American Activities Committee for a list of people who were labeled communist and persecuted or forbidden from exercising their occupation. This was at the height of the cold war. Adapted to today it means a list of people organizations that is denied a given type of service or privilege.

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