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Knocking Out Fraud Prevention


Here’s what you can do to ensure your growing needs are protected and supported. By Rafael Lourenco

When you sell online, you know it’s important to protect your business from credit card fraud. What you may not realize is that as your business grows, not only will your fraud-protection needs change, but the type of fraud prevention system you use can help or hinder growth.

There are three main ways outdated or insufficient fraud protection can cause your business to stall: by failing to support sales into new markets, by blocking valid orders, and by taking employee and management time away from core business activities. Outsourcing fraud protection rather than trying to handle it in-house can foster growth instead of holding you back.

Restricting sales growth

The global reach of e-commerce is a positive for merchants, as long as they have the anti-fraud resources to safely sell across borders. Those resources include cross-border transaction screening, but there’s more that a business needs to grow internationally. Staffers who can contact customers in a variety of languages, across multiple time zones and in a way that meets local customer service standards, is the key to avoiding false declines and strengthening customer relationships.

For example, a cosmetics retailer that starts out selling online in the U.S. knows there are potential markets in Europe, Latin America and the Middle East. But as a small company, it may have neither the staff, resources nor the expertise to detect e-commerce fraud in orders placed from abroad. When a flagged international order needs to be checked by calling the customer, the cosmetics company may not be open during business hours in the customer’s home country. And finding customer service staffers who are multilingual, well-versed in fraud prevention techniques, and fluent in local manners and customs isn’t easy.

If this company sticks with internal fraud-screening processes, it almost certainly won’t be able to sell into those markets abroad, and that sets a limit on its ability to expand. By outsourcing its fraud-prevention program to a company that has the capacity to screen cross-border orders and deliver international customer service, the company gains the freedom to sell into new markets and reach new customers.

Supporting your business development

There’s another way that underdeveloped fraud-prevention programs can hurt small companies as they grow—by pulling attention away from the core business to deal with order screening. In the case of our hypothetical cosmetics company, it’s easy enough at first to assign one customer service agent to manually screen flagged orders because there are only a few orders total each day. Meanwhile, the marketing and management teams start drafting plans for the company’s own private-label line of makeup.

But as the company’s customer base, media profile and order volume grow, both fraud screening and core business functions begin to suffer. Soon, the occasional all-hands-on-deck crisis during sales peaks becomes a regular occurrence. The company’s plans for its own cosmetics brand languish as everyone gets pulled into the fraud-management process. At some point, the company’s owners and managers have to decide if they’re in business to sell cosmetics or to screen orders for fraud. If they choose to outsource their fraud screening to a service that can handle sales peaks without compromising fraud protection, they can get back to the heart of their business and their goal of developing their own products.

Outsourcing fraud management

Many times, online retailers switch to outsourcing after they experience one of the situations above – they’ve run into a hard limit on safe expansion, or they’re overwhelmed by in-house order screening as their order volume grows. Ideally, though, the move to outsourced fraud protection should happen before growth takes off and before the company hits a growth plateau in its home market. Certainly, any company that’s planning a major marketing initiative, product development program, or international expansion should first review its fraud protection plans to make sure they’ll support, not impede, these plans.

By outsourcing fraud prevention before it’s a crisis, e-commerce companies can keep their focus on sales growth and product development, while also enjoying the peace of mind that comes from professional fraud protection.

Rafael Lourenco is the vice president of U.S. operations at ClearSale, a Card-Not-Present fraud prevention operation that protects e-commerce merchants against chargebacks. Visit http://clear.sale/ for more information.

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