“We don’t have time to manually review transactions.” It’s a common refrain among e-commerce merchants. They know that customers are fickle and that they’ll go where they can get quick, accurate service. If you can’t provide it, customers won’t hesitate to leave your site for a merchant who can.
So, to screen and approve those transactions quickly, you find yourself relying 100% on an online fraud prevention solution. It gets the job done, but at what cost?
Great customer service is about more than processing orders quickly. It’s also about your obligation to protect your customers (and your business) against the rising incidence of card-not-present (CNP) fraud. And that occasionally means performing manual reviews of orders to ensure customers are who they say they are. Here’s why manual reviews are so important to your business’s success and how they can be done in a relatively frictionless way when you have the right team in place.
They Reduce the Risk of False Declines
With e-commerce merchants estimated to lose an average of $6.4 billion to CNP fraud every year, it’s no wonder that they’re implementing automated fraud prevention solutions that deny suspicious-looking transactions. It seems like a solid plan, until retailers learn that these fraud prevention solutions are actually automatically declining a significant number of legitimate transactions. It’s then that they learn CNP fraud isn’t their biggest financial challenge: Instead, it’s delivering accurate approval rates.
These false declines end up costing merchants far more than chargebacks ever could — a predicted $443 billion by 2021 — and often come in the form of lost sales and customer frustration. Merchants don’t just lose the potential lifetime value of embarrassed and angry customers who have had their good orders declined. They also risk those customers turning to social media and sharing their displeasure, potentially turning away other customers. An American Express study, for example, found that consumers tell an average of nine people about their good experiences, but they tell 16 people about the bad.
Sure, manual review can be time-consuming. But it’s worth the effort. Manual reviews frequently lead to approvals of suspect transactions. In a recent Aite survey and report, 50% of merchants indicate that over 70% of manually reviewed transactions are approved.
Improve the Quality of Future Automatic Reviews
It may sound counterintuitive, but taking the time to manually review suspect transactions can actually improve machine learning algorithms. Here’s how:
Algorithms are based on historical data, learning both from experience and from the data that humans (who also learn from experience) provide.
So, what happens if there’s a completely unprecedented event (like COVID-19) or an emerging fraud threat that the artificial intelligence (AI) solution hasn’t yet been taught how to resolve?
If unusual events result in a change in consumer behavior, these AI-only systems may struggle to make the right transactional decision, potentially flagging vast swaths of transactions as “high risk.” If all these risky transactions are simply denied and not analyzed, the system won’t learn and improve…and will continue to repeat the same mistakes.
But having a specially trained team of fraud analysts manually reviewing every questionable order can help fill those gaps in an automated fraud solution, which can ensure legitimate transactions are never incorrectly denied outright. Often, these trusted partners bring fraud-specific problem-solving knowledge and unique skills and can detect subtle fraud patterns as they develop and customize the fraud-spotting algorithm for each merchant.
Using Human Analysts to Improve Manual Reviews
In the end, no matter how advanced technology gets, humans will always still play a role in validating transactions or following up with those that have been rejected — reducing the number of false declines and making the AI system more effective (and accurate) with future transactions.
At ClearSale, we combine data analytics, statistical intelligence and more than 700 seasoned analysts to perform real-time evaluations on every order and offer the immediate decisions that keep your business profitable.
Could our unique approach help you improve fraud protection and maximize sales? Download our “Fraud Protection Buyers Guide” to explore your options and ensure the fraud protection solution you choose is the one that will meet your needs.