Imagine how much bigger travel would be if we took on the bad guys collectively and with a level of sophistication that combines human intelligence with machine learning? That’s the message Angela Whiteford, chief marketing officer of Forter, wants to bring to WiT when she speaks at the Singapore conference on Oct 15.
On average, in e-commerce, 30-50% of transactions that merchants decline are actually good, what the fraud industry calls “false positives” and of those rejections, 40% do not return.
What this means, said Whiteford is that merchants are turning away legitimate customers and losing lifetime value (LTV). “We have companies who are fighting for every little piece of business, building sites for high conversion, but facing significant revenue leakage,” said Whiteford, who joined the fraud prevention and detection startup in January this year, after spending four years as vice president of Affirmed Networks in the US.
With Forter processing transactions worth US$140b (second only to Amazon’s $250b), travel is a key category for the organisation, with customers like Priceline and Kiwi.com leveraging the company’s integrated fraud prevention platform. Forter is setting its sights on expanding further into the industry, as well as increasing its footprint in Europe and Asia.
Whiteford, who lived in Singapore from 2001 to 2003 when she was working with Nortel, said Asia leads in travel transactions – $400b. “It is significant in terms of online travel, hotels, and customer experience. When it comes to outbound travel, China is a clear leader with Chinese residents making 149.7m overseas trips in 2018.”
What makes travel unique from a fraud perspective
What makes travel unique from the fraud perspective is that all interactions need to occur in real-time. “Consumers can’t wait to book a ticket,” she said. “I just booked my train ticket 10 minutes before I boarded. That’s the way consumers are buying travel.
“Then there is the low loyalty – I booked a hotel in New York and I looked at three sites before I picked one. In Asia, the market is developing fast and is more innovative and agile. There are new players in the market every day, and each country has its own platforms and preferences. So, if you can’t deliver an exceptional customer experience every time you won’t survive.
“There’s also the low margin, depending on what products a merchant is selling. Companies just can’t afford revenue leakage.
“That’s where the challenge lies. How do merchants manage all this in a world where customer expectations have changed, while simultaneously protecting themselves from risk? How do they innovate? How do they remain competitive? And how do they protect the customer from risk?”
With the surge in e-commerce worldwide, it stands to reason that fraud is on the rise.
Said Whiteford, “There are all kinds of fraud. We are seeing more hacks into loyalty programmes. Loyalty fraud is unique because it involves attacks at multiple touchpoints in the customer journey. The most precious customers are being exposed to fraud, people stealing points, redeeming points, misrepresenting credentials.
“What used to be only credit card fraud is now shifting. Fraudsters realise tools have become good at the point of transaction but there are other weak links in the purchasing journey, and these systems do not not talk to each other, delivering an inconsistent customer experience. For example, if you buy with a credit card, you may be approved but if you check out with your loyalty programme, you may be declined because the systems are not able to detect you as the same buyer.”
Fighting the weak links across the customer journey
The fragmentation of the customer journey has opened up more weak links and made travel more vulnerable, she said, and fraud protection and detection has to work across the entire journey.
That was the motivation behind Forter’s decision to build an integrated fraud prevention platform. “Instead of having separate tools for each part of the journey, which leads to inaccuracy and bad customer experience, the platform covers the buyer’s entire journey. We also tailor solutions to the merchant – what’s their risk appetite, which countries they want to serve, what services are they offering, what is their business model etc.. With this platform, we create a network effect and build a coalition of merchants who fight fraud together.”
Travel brands that have signed up to be part of Forter’s network include Priceline and Kiwi.com. “As big brands join our coalition of merchants, they all benefit from the information we see throughout the network. If we see fraud trends or specific methods of attack in one merchant’s platform, we are able to immunize the entire network against this form of fraud. This wealth and depth of data is what powers our Global Merchant Network/coalition and benefits all of our customers.
“Becoming part of a bigger network helps our partners fight fraud and helps us to identify good buyers more accurately.”
Globally, Forter knows over 550m identities. In the US alone, the company recognises 96% of buyers who regularly shop and buy online. “We know if a customer is good or a fraudster.”
Fraud protection is about better security and financial inclusion
The other interesting thing with travel is that it is more challenging to tell good from bad because of traveller behaviors. “You and I, we make bookings from our hotel rooms, different destinations, using different cards. We buy while on the go, so our purchase behavior can look risky or fraudulent. But the OTA’s or airlines with rules-based systems or manual review-based fraud prevention approaches may be overly conservative and block certain countries that are considered “high-risk”. If we get fraud prevention right, we can equalize – why should someone be penalised just because they live in a certain country that’s been identified as high-risk?
“In Asia, we also see cases where travelers looking for more authentic experiences make bookings with smaller local agencies. In such cases, differentiating the legitimate agencies from the fraudulent ones is crucial.”
With the current pace of change and the highly competitive nature of the industry, she said, manual reviews of credit cards transactions do not work – this can explain why even after your credit card has been charged, you do not immediately receive an e-ticket from an OTA that you may have booked through.
“What is clear is that to fight fraudsters, who are working every minute of every day to find flaws in the system, companies have to constantly be on their toes and scale by leveraging more sophisticated technology. Fully automated fraud prevention means leveraging machine learning tools while simultaneously having teams of human fraud experts and researchers working hand-in-hand with the innovative technology to stay a few steps ahead of the bad guys.”
Note: Sign up for WiT Singapore 2019 here.
• Featured image credit: Duncan_Andison/Getty Images