DEPLOYING FRAUD STRATEGIES FASTER WITH PREDICTABLE RESULTS eBOOK: The benefits of instant ‘what if’ analysis

DECISION MANAGER REPLAY

Make hindsight your insight

FRAUD MANAGEMENT MANUAL REVIEW THE RIGHT RULES DECISION MANAGER REPLAY

Manual review is up and chargeback lag times are a drag on efficiency.

In this eBook, we examine these growing challenges and how to effectively counteract them.

TIMING IS EVERYTHING• Typically, the impact of a new fraud strategy can

only be evaluated after three months in production.

• Often it takes at least 2 to 3 months to gather enough chargeback information to evaluate a new rule.

• It’s necessary to quickly test new fraud strategies to increase conversion rates.

The pressures today on fraud management are mounting

01

FRAUD MANAGEMENT

After automated screening, some suspect orders can be sent for deeper investigation to a review team. The review team will use additional data verification sources and apply their own judgment –developed through experience – to make a decision.

Manual order review, the most expensive part of fraud management, has shown an increase since 2012.

Source: CyberSource Online Fraud Management Benchmark Report, 2016

25%

2012 2013 2015

27%

29%

Manual review of incoming orders is increasing

02

MANUAL REVIEW

ORDERS REVIEWED BY MERCHANTS PRACTICING REVIEW

A large portion of fraud management expenses are associated with the order review staff.

Finding ways to improve the productivity of the fraud team can help your fraud management scale with your eCommerce business.

of the average fraud management budget is spent on order review staff.

50%Nearly

Manual review costs can be significant

03

MANUAL REVIEW

Source: CyberSource Online Fraud Management Benchmark Report, 2016

FRAUD MANAGEMENT EXPENDITURES

Order review staff

3rd party tools and services

Internally developed tools and systems

46%32%

22%

While it’s important to ensure that manual review is as efficient as possible, it’s even more important to raise the rate and accuracy of automated fraud screening, so that you can improve genuine order acceptance, reduce fraud losses, and lower the manual review rate.

Merchants are spending considerable time reviewing suspect orders

04

MANUAL REVIEW

Source: CyberSource Online Fraud Management Benchmark Report, 2016

minutes are spent manually reviewing every suspicious order on average.5

On average, 3% of orders accepted after manual review later turn out to be fraudulent.

With the right rules you could be automatically accepting more good orders.

Optimizing rules to catch more fraud automatically can lessen the strain on manual review resources.

With better rules, good orders are more likely to be automatically accepted in the future, helping to enhance the customer experience.

But creating rules from purely anecdotal feedback or from hunches rather than data can lead to unexpected consequences.

Better rules can help improve efficiency.

Are you reviewing too many orders?

On average, 82% of orders are accepted after manual review.

05THE RIGHT RULES

ORDER ACCEPTED AFTER MANUAL REVIEW

Source: CyberSource Online Fraud Management Benchmark Report, 2016

2012 2013 2015

75%

85%82%

When fine-tuning rules to improve the efficiency of fraud management, one of the major challenges is that it takes months to fully assess the impact of new rules.

CUMULATIVE CHARGEBACK PERCENTAGE RATE

Often information scarcity can be an issue when designing new rules

It often takes at least 2 to 3 months to gather enough cumulative chargeback information to evaluate a new rule in production. By then, it may be too late.

2 to 3 months

Note: This graph is illustrative of the chargeback rates typically seen by CyberSource across its merchant base over a 26 week time frame.

06THE RIGHT RULES

Higher bound (+1 standard deviation)

KEY

Lower bound (-1 standard deviation)

Average3 months to receive truth data

2 4 6 8 10 12 14 16 18 20 22 24 26

20%

40%

60%

80%

100%

Weeks since original transaction date

Cum

ulat

ive

Cha

rgeb

ack

%

CyberSource Decision Manager Replay is the first solution of its kind. It allows new rules to be applied to historical data and produces instant reports showing exactly what would have happened had that rule been in place at the time – and therefore what its effect will likely be going forward.

What if fraud managers could test different fraud rules and strategies against historical data, and see the impact in real time?

07DECISION MANAGER REPLAY

Decision Manager Replay accesses transaction history, including all data elements from order sessions.

ACTIVATE BEST

A

B

C

D

Stra

tegy

Tes

t

Decision Manager Replay, part of the CyberSource Decision Manager platform, enables businesses to compare different fraud rule profiles against their own historical data.

It can produce a comparison report in real time, allowing businesses to quickly assess the business outcomes of various fraud management strategies (orders accepted, rejected, and sent to manual review) before activating the rules in the production environment.

Note: This data is illustrative of an order disposition for a mid-sized merchant typically seen by CyberSource across its merchant base.

Quantify the impact of fraud strategies in real time, before activating in production

08DECISION MANAGER REPLAY

New Strategy

Current Strategy

Before Decision Manager Replay

After Decision Manager Replay

Accept

Review

Reject

Grand Total Accept Reviewer Accept

Review Reviewer Reject

Reject

$798,823 $425,148 (53.22%)

$55,436 (6.94%)

$82,721 (10.34%)

$27,721 (3.47%)

$207,944 (26.03%)

$483,672 (+13.77%)

$390,215 (-8.22%)

$24,434 (+44.08%)

$33,633 (+40.73%)

$9,511 (+34.31%)

$25,876 (+12.44)

$155,788 (+88.67%)

$30,695 (+7.22%)

$30,695 (+55.37%)

$44,817 (-45.72%)

$17,058 (+61.54%)

$32,522 (+15.64%)

$159,362 (-23.36%)

$4,237.97 (+1.00%)

$306.00 (+0.55%)

$4,123 (+4.99%)

$1,150 (+4.15%)

$149,544 (-28.08%)

Shown in parentheses

% Change (before vs. after)

Change in transaction count

% of total before

% of total after

% Transaction amount (US$)

% Fraud count

Got a new rule in mind? Gain insight into the percent of orders that will be sent to review, and which will be accepted or rejected… before you make changes.

FIND WHICH RULES HELP YOU:• Accept more genuine orders• Reject more fraudulent orders• Automatically screen more orders, without manual review• Discern which orders truly need human scrutiny.

POTENTIAL NEW RULE IMPACT ON ORDER DISPOSITION

% Accepted

% Reviewed

% Accepted

% Rejected

% Rejected

Optimize what’s sent to manual review with more data

09DECISION MANAGER REPLAY

FASTER INSIGHT INTO FRAUD RULE TUNINGQuickly determine the effectiveness of any new fraud rules that are put into place.

TEST MULTIPLE FRAUD STRATEGIESTest multiple rule sets in real time, quickly helping maximize revenue and reduce fraud.

BETTER ALLOCATE MANUAL REVIEW RESOURCESWith more effective automated systems, manual resources can be reserved for only the most challenging cases.

FRAUDSTERS ARE ALWAYS CHANGING THEIR TACTICSRegularly adjust fraud strategies to maintain optimal fraud mitigation defenses.

Benefits of Decision Manager Replay

10DECISION MANAGER REPLAY

ABOUT CYBERSOURCE CyberSource Corporation, a wholly owned subsidiary of Visa Inc., is a payment management company. More than 400,000 businesses worldwide use CyberSource and Authorize.Net brand solutions to process online payments, streamline fraud management and simplify payment security. The company is headquartered in Foster City, California. CyberSource operates in Europe under agreement with Visa Europe. For more information, please visit www.cybersource.com.

CONTACT US sales@cybersource.com www.cybersource.com/decisionmanager

Toll Free: 1-800-530-9095

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