Why Human Analysis Is an Integral Part of Fraud Management
When it comes to analyzing transactions for fraud, many companies are quick to adopt a solution that exclusively uses artificial intelligence. After all, isn't cutting-edge technology the best objective evaluator of a transaction and the most cost-effective approach?
Before you answer, consider this scenario: Helen moved to a new city and needed to buy a refrigerator. She lost her credit card, so a friend let Helen user her store card to buy it. Despite her friend’s excellent credit history with the store, the transaction was declined. Why?
When the store's fraud protection solution analyzed the transaction data. it noticed a new email address and physical address and deemed the transaction to be high-risk. Because there were no human analysts to consider the context of the purchase, the transaction was rejected -- and the store ended up losing a valuable long-term customer.
Although the example is fictitious, the premise is real and shows the flaws of relying exclusively on technological automation and the importance of human analysis in fraud detection.
How Human Analysis and Technology Can Work Hand-in-Hand
Merchants who use a combination of cutting-edge artificial intelligence (AI) and specialized human analysis can more completely evaluate a transaction, leading to fewer false declines. The human analyst can use their industry-specific knowledge and apply context to a transaction, while AI can compare established fraud patterns and fraudster characteristics to the purchase to make well-informed transactional decisions.
It's an approach that can make all the difference in a competitive market. The combination serves to both satisfy existing customers and increase the likelihood of new business in the future.
Turn back to Helen's buying experience. How frustrated did she feel by being unable to make that needed purchase? Where is she likely to take out their frustrations after the false decline? If you said "social media," you're right. And then what happens? People she knows will "like" her comments and share them with hundreds of others, creating a snowball effect. The result of the negative attention can be a financial loss for the company and damage to its reputation and brand image.
All which could've been avoided with the simple addition of human analysis to fraud detection.
It's why ClearSale uses the hybrid approach in its solution. "Our primary goal is always to authenticate buyers. We combine technology and fraud experts to look for good buyers," said ClearSale's quality manager Gabriel Firer. The advantages of this model are clear, he added, "They range from better fraud indicators to a higher sales convergent to an excellent market image."
How Merchants Can Choose the Right Fraud Protection Partner
When it comes to selecting the right partner to defend against fraudsters and grow sales, there are many things an e-commerce merchant should consider, including:
How Much Experience Does the Team Have?
Because fraud detection is so critical, merchants should look for a partner with an in-house team with extensive experience and qualifications.
Does the Solution Provide Ongoing Training to Team Members?
"Fraudsters are increasingly creative. Experts should be no different," Firer said. A good fraud detection team will receive ongoing training and support to be able to identify even the most subtle fraudulent behaviors to preserve the good buyers and boost the company's bottom line.
It's not easy to select a trusted fraud protection solution, but ClearSale simplifies comparing the available options with our new Fraud Protection Buyers Guide. It details everything you need to know -- even listing questions you should ask to make an educated decision. When you're ready to discover the right fraud protection solution for your business needs, download our free Fraud Protection Buyers Guide today!