This makes life much more difficult for companies that want to protect customers and themselves from business fraud.
People accept things that keep them safe from dangers that they can perceive – think seat belts, locks and health and safety legislation.
When it comes to the more nebulous – but no less prevalent or damaging – threat of business fraud, they more likely to see safeguards as unnecessary inconveniences.
Yet anti-fraud measures are more necessary than ever. Each month brings fresh news of online business frauds and hacks. Only last month, new research suggested that 6,000 online stores – including well-known high street names – have been compromised by card skimming technology.
Meanwhile, businesses that don’t use multi-factor authentication (MFA) experience three times more phishing attacks on their web portals than those who do. The challenge for businesses is how to balance anti-fraud measures with providing a smooth and seamless customer experience.
Unfortunately, sales and marketing teams often find themselves at loggerheads with the business fraud department over this issue. The former want to remove every possible barrier in the marketing funnel, while the latter naturally want to fight fraud with every weapon at their disposal…
Here are a few examples of how this has happened:
- Adding more security challenges for different products or channels undermines a seamless customer experience by creating new hoops for customers to jump through and more processes for them to follow. Customers simply do not understand why security for an existing relationship with your product or service can’t be automatically extended to new products and channels.
- Declining transactions in order to prevent possible fraud often results in customers using other credit cards at the point of sale; this may be a temporary inconvenience, or it may mean that you lose your coveted “top-of-wallet” position.
- Putting longer hold times on transactions in order to confirm legitimate transactions can result in financial difficulties for customers; customers today have a lower threshold for inconvenience and a greater willingness to change providers, so these kinds of fraud measures can lead to customer defection.
It’s no surprise that relationships are often strained between teams on the product and marketing side and their colleagues in fraud prevention. Unfortunately, this only benefits the fraudster, who counts on organisational siloes to exploit blind spots and evade detection.
So, how can we reconcile the seemingly-contradictory objectives of the sales and business fraud department?
From an Experian viewpoint, we recommend three organisational best practices that will align revenue goals with combating fraud. The good news is that none of these require changes in reporting structures or functions.
(1) Regular, proactive communication across product, marketing and fraud teams to help anticipate new points of attack. For example, including fraud teams in discussions about new product development, channels, markets and promotions can help uncover new opportunities beyond just catching fraud.
(2) Common goals for optimal customer experience across product, marketing and fraud teams to encourage a more collaborative way of creating targeted growth and fraud strategies. For example, sharing information about your customer’s behaviour to help improve offer redemption and fraud detection.
(3) Rethink how customers interact with your business, moving away from isolated interactions to a lifecycle relationship mentality. For example, shared responsibility for fraud across account opening, access and transactions will help detect fraud earlier and prevent financial loss.
Central to all three of these goals is collaboration. Any successful attempt to reconcile anti-fraud measures with a great customer experience must begin with effective communication between teams where each sets out its needs and shares the valuable data that they hold.
Finally, it’s important not to forget the customer in all of this. Businesses should carefully consider how they communicate their anti-fraud policies to their customer base.
As mentioned earlier, people are much more amenable to little inconveniences if they appreciate that there’s a good reason for their existence.
Businesses that take the time to inform their customers about how they are balancing fraud with the customer experience will be well placed to negotiate the tricky path between the two.
Boris Huard is UK & Ireland MD at Experian Decision Analytics
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