First Published in NBR - 19 October 2015 by Joshua Riddiford
eStar launches risk management profile as a stand alone service
A Christchurch based E-commerce company is expanding access to a software tool which uses a wider range of factors to help kiwi and aussie retailers crack down on online fraud.
eStar online launched their risk management profiler as a stand-alone service providing real time information on fraud risks associated with online transactions. The service has already been available as part of a wider package to existing customers.
eStar online’s risk management profiler uses patterns and analysis gained from 12 years of e-commerce fraud data from a client base including some of the largest retailers in NZ and Australia to identify warning signs and allocate a risk score to transactions.
eStar online’s CEO, Andrew Buxton says the typical approaches to assessing risk factors for fraud employed by most companies are insufficient and companies need to use a more holistic picture to assess fraud.
“Most of the basic methods of managing online fraud are to use credit black lists. That really just identifies credit cards that have already been stolen. When what you really need to do to be effective is to look at all the elements around the order things such as: Who is making the order and what is their IP address?”
Fraudsters are wising up to established modes of detection so retailers need to be more than one step ahead of them.
“People committing fraud are getting smarter every day. If somebody’s using a credit card that hasn’t been reported stolen you would very rarely pick that up. Often people would use something like an order value to spot fraud –they would only review orders over a certain dollar value – but a lot of people doing that sort of fraud would then create multiple orders at a smaller value.”
The business operates entirely on a transaction fee basis in real-time so retailers could connect to the profiler tool and then every order is evaluated and given a risk score, Mr Buxton says.
“It all works in real-time so basically our service is delivered, whoever’s selling online, they can very simply connect to our RM profiler tool and then every order on a real time basis gets evaluated and is given a risk score.”
Friendly fraud –an expression which refers to people who appear to be bona-fide customers but were dishonest in falsely claiming a product had been damaged or that they had not received a delivery - comprises 60% of online fraud and represents a type of fraud retailers need to look out for, Mr Buxton says.
Mr Buxton wouldn’t divulge levels of company revenue but expressed confidence about the expansion of the programme beyond its existing client base.
“We already have 50 happy customers using this tool already to protect themselves from online fraud and we are looking to grow that massively as a niche product in Australia and New Zealand initially but the same logic applies internationally as well.”