Fraud is a fact of life in business – but it needn’t be an end to business for merchants if they look at how they react to fraud and deal with it. Here David Lotfi explains what that means in practice
Every merchant knows the story: It’s Friday night and you receive an email from the operator: “We have too many customer complaints, so we need an OTP flow by Monday”.
You know you’re going to have a horrible weekend believing that your ROI and conversion rates are set for a drastic drop.
Yes, fraud is a pain, but it doesn’t have to be fatal and you certainly don’t need to lose money – or sleep – over it. Fraud is not the merchant’s fault.
Let’s start off by focusing on the positive. Few industries do customer acquisition and billing efficiency better than we do. An exciting environment full of promise and healthy competition means we have become virtual experts in ROI. That’s the good news. The not so good news is that web-based criminals have also noticed the potential of what we do and fraud on the Internet has consequently skyrocketed.
Since 2015, fraud has steadily emerged as mobile industry enemy number one. This means you can take heart in the fact that the problem is not confined to your specific organization – it’s a massive industry challenge that spans the entire globe and is threatening the very existence of the micropayment and digital advertising industries.
Boom times for fraudsters mean we are all experiencing problems with clients, partners, carriers and merchants that are centred on billing flows being cut and revenue loss.
No victim can be guilty of a crime perpetrated by a criminal and the same is true of merchants. Even if as everywhere, there can be some bad players, most merchants are purely innocent victims of widespread fraud. The key to beating this modern-day scourge is to firstly understand it. And when it comes to understanding online fraud, we must firstly understand that the industry’s response to online crime follows a certain predictable pattern.
How everyone reacts when confronted with fraud
The initial situation – The process begins with everything seemingly just perfect. Industry players see that the market for their products and services is growing and they are happy with their work and so are their clients and customers.
The crisis – Fraud appears out of the blue and the effect is instantaneous and particularly vicious because it masks what is really going on.
Denial – At first, your revenue appears as if it is growing and the result is that you are in denial. You believe those good results you’re seeing are coming from your good work, not fraud! “I don’t have fraud, I have trusted partners, it is just the hard work that we have done on the landing page that is paying”.
Anger – When those first nagging doubts turn to reality and you finally understand that those new transactions are fake, you become angry at the fraudster and at the operators who you believe are turning against you are payment flows begin to be cut.
Bargaining – You try to negotiate with the operator: “Yes maybe some part of my traffic is fraudulent, but I’ll deal with it, don’t cut my payment flow!”
Depression – Eventually, operators are not reassured, revenues become lower than ever and depression settles in.
Acceptance – This is when you either believe that you can’t do anything about fraud and that you need to accept a reduced performance or you need to find new solutions.
Rest assured all of this is a normal reaction to a very common problem and you are not alone.
How to react to fraud the right way
The online world is notoriously unsecure, but you can get through security challenges with the right partners. Fraud is not a death sentence, it is criminality that needs to be managed and, indeed, it can be beaten. Already, some markets like France and Belgium have more or less totally banished fraud on Direct Carrier Billing.
What the usual pattern of reaction to fraud teaches us is that we need to leave depression behind us and get to grips with accepting that fraud is a challenge that needs logical organization and action to beat.
You can organise yourself effectively with solutions that worked for others and you can even turn the situation on its head and build better trust and achieve more growth that before.
Most solutions you are using now to protect yourself are probably inefficient. Fraud is a problem for everyone, but most of the solutions offered don’t really work. Numerous companies are selling anti-fraud solutions and even fraudsters are selling anti-fraud solutions, with predictably poor results.
If you look at relatively safe markets like France and Belgium, you can see that the only kind of company that can help you needs three things:
Independence – Advertisers are competing very hard in carrier billing, anti-fraud system access sensitive data, anti-fraud can block subscriptions. There should be no doubt among the players on why a conversion is validated or not. The solution used cannot belong to one of their competitors.
Cybersecurity focus – The second component is for the company to be 100% focused on cybersecurity. The market deserves a specialist and API first-oriented company. When dealing with fraud, one must absolutely direct all resources towards the overriding goal of cybersecurity.
Expertise on fraud – You can’t send a generalist to do an expert’s job. Only a dedicated fraud expert can properly understand the ins and outs of the market and know the needs and issues all players are facing because of fraud.
David Lotfi is CEO of Evina. Evina is the one company that ticks all the boxes above. It is no surprise then that we have played a pivotal role in securing the French and Belgian markets, providing a welcome boost to the entire industry and making all players more successful.