By Karisse Hendrick, Principal, Chargelytics Consulting
Trust & Safety, an organizational philosophy that has emerged in the e-commerce fraud space over the past several years seeking to replace “fraud prevention,” has been the source of much confusion. While the two terms are not interchangeable, and represent different mindsets and strategies for online companies, there are some similarities. The circles of a Venn diagram of the two would definitely show some overlap, but plenty of individual characteristics as well. Many companies are rebranding Fraud Departments as Trust & Safety. But, does it make sense for your company to consider doing the same?
The term “fraud prevention,” often used to define a department and the titles within it, typically centers around payment fraud prevention. If your company accepts payments online for goods or services, you are financially responsible if a fraudulent card is used to make a purchase. According to the most recent LexisNexis True Cost of Fraud survey, for every $1.00 in fraud, the cost to the business is $3.13. As traditional online companies grow, these losses add up quickly by way of chargebacks. Usually, after a company has experienced these painful losses, they will hire someone to lead a department and establish a strategy to identify and prevent these transactions, prior to the fulfillment of orders. Depending on the size of the company and their risk stack, these teams can range from one employee to hundreds.
The term Trust & Safety is a relatively new descriptor for the name of a department within an online company and the team members’ titles. The phrase first appeared when marketplaces began engaging in CNP commerce. Because fulfillment of the goods or services, like riding in a strangers’ car or staying at a strangers’ house, is not provided directly by the platform, and because there can be extensive risks beyond financial loss, these companies found establishing user trust in the platform was paramount.
While fraud prevention is usually a responsibility of a Trust & Safety team, some assume that these two terms are interchangeable. But Trust & Safety teams focus on a lot more than just payment fraud. Depending on the company and its business model, they may be responsible for everything from content abuse (like fake reviews, spam or threatening user generated content) to researching accusations of real-life consequences that occurred with or by a member of the marketplace, like a driver or a host.
More than a job title
Beyond the scope of responsibilities, many people who are responsible for Trust & Safety say that it is also a mindset and a strategy. The name implies it all. These teams are responsible for ensuring that their users trust the company and feel safe using it. A 2019 study by Edelman, a global marketing and PR firm, found that around 8 in 10 respondents (81 percent globally, 80 percent in the U.S.) said that trusting a brand to do what is right is a deciding factor in a purchase decision. Trust doesn’t just impact single purchases. It also impacts brand loyalty. Eighty-two percent of U.S. consumers and three-quarters of global respondents said they will continue to buy a brand they trust, even if another brand suddenly becomes hot and trendy, according to the Edelman report.
Establishing trust and safety with consumers is critical to the bottom line. Because of that, many former fraud prevention professionals who are now in Trust & Safety departments have shared that they feel they are enabling sales versus preventing them. Even though part of the responsibilities of a Trust & Safety team is to identify purchases made with stolen credit cards, many of these companies have realized that preventing payment fraud on their platform does lead to trust. As does having policies to protect their users.
Policies are big part of the role Trust & Safety teams play within a company. Policies that ensure safety and trust are critical. For social media companies, their Trust & Safety team may be responsible for determining guidelines for their users around posting misinformation or threatening comments. For a marketplace that allows users to post their own products for sale on their platform, their policies can ensure that no illegal or counterfeit items are being sold on their site, or that users are not posting fake reviews to discredit their competition or to improve their own reviews. And, for platforms in the “sharing economy,” policies can protect their users from physical danger or theft of personal items. This is not meant as an exhaustive list, but a few examples of how important policy is to establishing trust and convincing users they are safe when using the platform.
Should Fraud re-brand to Trust & Safety?
This is not a settled issue in the industry by any stretch. While there are some advantages to using “Trust & Safety” rather than “Fraud Prevention,” they are not interchangeable. Omnichannel retailers, for example, are responsible for fulfilling and providing their own products. So, they are not the only team that has the responsibility to gain their customers’ trust. That is a shared responsibility with other departments such as fulfillment, customer support and the marketing team that creates product descriptions. In these instances, the core function of the fraud team is to protect the business and its profits, as well as the reputation of the brand. If an omnichannel retailer was to incorporate a user-generated marketplace or reviews, they may want to consider broadening the scope of responsibilities. If their responsibilities expanded, they may consider re-branding the department to reflect the broader scope of the team.
Industry perspectives on this topic
Recently, I asked my professional network for their own perspectives on these two terms. Here were some of the comments:
Oversimplified, I see fraud prevention as "stopping bad" and T&S as "enabling good while also stopping bad." Further, I think fraud prevention is rolled up into a Trust & Safety strategy. T&S is also more palatable and resonates with company leadership. You can insert yourself and your team's mission into the company's growth strategy by broadening your perspective. – Jacob Sanchez, Manager of Risk Operations for a delivery platform
I personally never liked using Trust & Safety for fraud as it has nothing to do with safety and only a bit to do with trust. Fraud should be a specific entity IMHO. When Fraud falls under a T&S org, it can sometimes be treated as a low priority. Every time I have stepped into a fraud leadership role, I’ve found fraud has not been given the priority it needs to make appropriate impact. Making it a highly specialized unit within the company makes it easier to capture budgets, developer time, and not get bogged down with other T&S projects/initiatives. – Matt Vega, Senior Fraud Operations & Strategy Manager at a Silicon Valley Technology Company
"Fraud prevention" to me implies a stronger focus on loss prevention, has stronger roots in payments and financial services risk management, in a more regulated financial product environment. Problem areas would be card payments fraud, application frauds in opening consumer or merchant accounts, anything implying financial loss. Adjacent to credit risk.
"Trust & Safety" to me implies ownership over the overall safety and security of a platform, and implies more of a focus on user experience not directly related to financial loss. The T&S title seems to have emerged as social media and content platforms have evolved. I view T&S as a better framing for problem areas like spam, abusive/extremist content, fake accounts/reviews, etc.
It seems reasonable for a company to have both a Fraud and a T&S team; but I could see how the framing could change over time to use "Trust and Safety" as a more inclusive, broad function that encompasses fraud. - Vivek Ahuja, Head of Product & Partnerships at Sentilink
As CNP commerce continues to expand and innovate, the evolution of fraud-fighting and Trust & Safety will be inevitable. Whether that means inheriting new responsibilities or expanding the name and strategy of the department to fit the new areas of responsibility. In the last 20+ years that CNP commerce has been online, innovation has been rapid, and no doubt it will continue to be. And, no mater the business model, there will always be payments and customers to protect.