By Lola Omo-Ikerodah, Senior Content Writer, Ravelin
From blocker to revenue enabler, businesses are seeing their fraud teams with new eyes. What has brought about this change? And how can you build on it?
Pre-pandemic, fraud teams were often unfairly characterized as sales blockers. This meant their fraud concerns were often overlooked. They were also left out of the loop when it came to new initiatives, leaving them to deal with any negative fallout after the fact.
Then the pandemic hit, and the expansion of e-commerce created new and exciting opportunities for fraudsters. So, while order volumes skyrocketed, fraud surged right along with it. Suddenly, all eyes were on the fraud team. How has this affected business’ perception of them?
To dig further, we asked fraud and payment professionals across industries about their experience of this change…
Businesses are more aware of fraud
In 2021, over 50 percent of fraud and payment professionals said that business awareness of fraud had gone up. With global losses to online payment fraud estimated at $20 billion, this is no surprise.
Some experts suggest you can expect to see a 2–5 percent increase in fraudulent activity when traffic increases by 15–20 percent. As you can imagine, the implications of this have been huge. The fraud exposure that comes with rapidly increasing transaction volumes is now top of mind across businesses.
Fortunately, action seems to have followed this new-found awareness. As one fraud fighter put it: “our workload and reach have exploded!” The fraud team has been pushed to the forefront, working closer with product managers, marketing, and compliance teams.
Another fraud expert gives us a bit more insight into this shift:
“Nobody really liked fraud teams. They saw us as someone who always said no or found a reason to stop projects. With time people have begun to take us into consideration and get our opinion before projects go live. There's still room for improvement, but when I started seven years ago, it was very different to how it is now.”
Fraud team as business enablers not blockers
In light of this, we are seeing many teams get well-deserved recognition. Particularly from business leaders. In fact, senior roles are the most likely to think perception has improved. In 2020, 75 percent of C-level reported an improvement. In 2021, this rose to 85 percent, with almost 90 percent of CFOs and CROs seeing a change.
You could say that the fraud team has undergone a rebrand. They’re doing the same essential work but reframed in a way that is more appealing to the wider business. In the words of one fraud professional: “we've shown how much can be saved and the impact of a strong fraud prevention team.”
This has transformed how the wider company works with the fraud team. As mentioned, other teams are proactively getting their input ahead of new product or payment method launches. The role of the fraud teams isn’t just to “patch up holes” anymore!
Businesses are putting their money where their fraud is
More and more companies are seeing the value of the fraud team. And we’re seeing resource allocation reflect this.
In 2021, around half of merchants said their budget to stop fraud had increased. And more than 75 percent of merchants predicted their fraud budget would increase in 2022. With losses to online payment fraud set to exceed $25 billion in 2024, this is probably a good idea!
This investment has extended to the teams themselves and we’re seeing more hires. Fraud teams across all industries have grown over the past year. In 2021, 86 percent of merchants had a fraud team of six or more, compared to only 78 percent the previous year. And only 12 percent of businesses had teams of five or fewer people, down from 20 percent in 2020. Almost 80 percent of merchants across all industries expect further increases in 2022.
Another interesting shift is that CFOs have begun hiring digitally-specialized employees and crisis-management savvy employees since the start of the pandemic. If 2021 taught us anything, it’s that online growth and resilience are key to business success. So, empowering your fraud team is paramount.
How can fraud teams keep the momentum going?
Fraud teams seem better positioned and equipped to keep fighting the good fight against fraud. But, as a fraud professional how can you make sure things don't slide back in your organization?
Frame data in terms of revenue lost – The fraud team has more presence in business meetings and projects than before. But to stay there, you need to speak their language! Leverage your data to show that a specific tool or course of action will save or recover money.
Map initiatives to company goals – Businesses often get nervous when fraud prevention is brought up. Their minds immediately go to genuine customers and traffic being blocked. In other words, less sales! Mapping initiatives back to relatable goals shared by various stakeholders will make getting buy-in much easier.
Use graph networks to visualize fraud – Some challenges are just hard to explain. Graph networks are visual tools that are easy for any business team to understand. They can help you walk your C-suite or any other stakeholders through the problem (and the solution).
For example, your marketing team may have an exciting and seemingly successful promotion going. But you know otherwise. Link analysis makes it easy to spotlight multi-accounting customers, sign-up bonus abusers and referral farmers.
Fraud teams for the win – Overall reporting on KPIs and objectives to continue to build exposure internally is incredibly valuable. Put frankly:
“They don't care about fraud, PSD2 and the difficulties you’ll see. They just want to know how much they can save and how much will be brought in. If we show them KPIs from the year before and say we lost $3 million that would otherwise have been revenue, then we definitely have their attention.”
We know how integral the fraud team is to business, you just have to make sure everyone else does too!
