How a luxury e-retailer reduces fraud
May 20, 2015 03:17 PM
Jomashop.com, a seller of luxury watches, pens and other items, can get online orders out the door in a matter of hours instead of days because it started using automated fraud review technology just more than a year ago.
At the 2015 Card Not Present (CNP) Expo in Orlando, Fla., this week, Jomashop general manager Osher Karnowsky told attendees that the retailer began using the technology from Forter in April 2014 so that Jomashop, No. 203 in the Internet Retailer 2015 Top 500 Guide, wouldn’t have to do manual reviews of orders. With its watches running into the tens of thousands of dollars—or more—the retailer has to be extra careful that the orders it receives are not fraudulent. Those manual reviews sometimes required quite a bit of work for the retailer’s fraud prevention team.
For instance, Karnowsky related the story of a celebrity he would not name who ordered an $80,000 watch. The retailer could determine the credit card belonged to that consumer but recorded a call with the celebrity so it could match the voice with YouTube videos involving that person, among other checks. As another precaution, Jomashop asked the celebrity to post a certain message from that consumer’s Twitter account.
The retailer faces no such headaches using Forter fraud prevention technology, which relies on some 4,000 data points to assess the risk of each transaction. Those data points include IP and shipping addresses, data gleaned from social networks and other sources, according to Forter co-founder and chief operating officer Liron Damri.
Damri, who spoke with Karnowsky on Tuesday, offered another tale from the world of celebrity to show how the technology works: Another order for an expensive watch recently came into Jomashop.com from a consumer using a mobile device inside London’s Heathrow Airport. The payment data was tied to an address in an expensive Los Angeles neighborhood, however, and the person placing the order wanted the item shipped to an address in Helsinki. During the days of manual review, such a transaction would have Jomashop workers seeking to confirm this consumer’s ID via phone and email, steps that would result in a shipping delay. And any delay, Karnowsky said, increases the potential for “buyer’s remorse,” giving the customer a chance to reconsider the large purchase or perhaps even start to distrust the retailer and its checkout process. “Customers would get upset,” he said.
But thanks to tying this consumer’s data to social media and other data sources, Forter “immediately” determined that the purchaser was a touring guitarist for a U.S. pop star, and approved the transaction.
Forter gains clients by promising to cover any chargebacks due to fraud for any transactions it approves. The company takes a percentage of those approved transactions, and while neither Damri nor Karnowsky would detail that cut, Damri said that, in general, the charge for a seller of luxury goods would be higher than, say, the seller of shoes.
Karnowsky and Damri said that since employing Forter, Jomashop has reduced from about three days to two hours the typical time it takes to get orders ready for shipping. Transaction decline rates have decreased by 69% and international sales have increased 35%— in large part because the retailer can more efficiently handle orders from outside the United States without worrying about fraud losses on any transaction Forter approves. In fact, thanks to its fraud prevention upgrade, Jomashop plans to increase its marketing in China and other countries.