The Top 500 retailer buys Campus Deals, which offers mobile coupons to college students.
Gilt Groupe sharpens its fight against online fraud
Fast-growing Gilt has a new way to quickly block crooks out to game its promotions.
Managing Editor, B2B E-commerce
The downside of fast growth for any e-retailer is that crooks often pay heed to that rapid ascent and seek to find ways to exploit any cracks in the merchant’s payments system.
But fast-growing Gilt Groupe Inc. has found a way to quickly respond to suspicious online orders, enabling it to keep a lid on fraud without expanding its fraud-management team, the retailer says.
Gilt, No. 140 in the Internet Retailer Top 500 Guide, specializes in selling designer fashion apparel through invitation-only, limited-time sales, and it has been expanding into online travel and hospitality markets with Jetsetter and Gilt City. Although the privately held company doesn’t release sales figures, Internet Retailer estimates the online retailer’s 2010 sales grew 150% to $425 million, up from $170 million in 2009.
All that growth has raised Gilt’s exposure to online fraud, but the retailer has become increasingly efficient at preventing fraud without increasing its staff, says Bill Severance, controller and chief accounting officer. “Our business has grown a lot in the past year, but since we’ve implemented our new fraud management system last fall we haven’t had to grow the team reviewing suspicious orders,” he says.
Gilt last November replaced its in-house system with the Interceptas fraud prevention platform from Accertify Inc. Since its deployment the new platform has helped Gilt better identify and quickly respond to suspected criminal activity, Severance says.
“We thought we were doing a good job before, but now we know we can do a better job of staying ahead of the fraudsters,” says Fred Schauvinhold, who manages the Interceptas platform as supervisor of Gilt’s order management system.
Interceptas provides tools for identifying, monitoring and responding to transactions suspected of being fraudulent. It can alert Gilt of transactions coming from IP addresses and geographic areas known for high rates of online fraud, for example, and the retailer sets business rules than can either automatically reject such orders or send them to manual review.
The system also can uncover fraudulent attempts to game Gilt’s promotions. A typical promotion might offer one expensive designer dress per customer, for example, but some criminals may try to disguise their IP addresses or change domain names to place multiple orders for products while making it appear the requests are coming from different people.
In other cases, a person may try to sign up as a site member with multiple accounts in an effort to trick the promotional system into granting multiple awards, such as free-shipping credits for referring new customers. “Promotions are an area where the fraud community has identified flaws to exploit,” Severance says.
The Interceptas system alerts the retailer if such attempts occur, and it also enables Gilt to modify its business rules, the retailer says. For example, Gilt might set a new rule that automatically blocks or sends to manual review orders for promoted designer dresses whenever more then one order appears to come from the same IP address. Likewise, it could set rules to block the issuance of multiple referral credits going to the same customer within a short time period.
Setting up such rules takes minutes in the Interceptas system, compared to a day or longer when Gilt had to rely on its own I.T. department to modify its in-house system, Severance says.
The new system not only is effective at blocking fraud, but it helps to ensure that Gilt is building its customer file without adding several names that are in fact the same individual, he adds.
“We’re looking not just for fraud, but any unusual behavior,” says Eric Fishman, Gilt’s manager of business process and internal controls. “We’re taking proactive steps to protect the quality of our member file.”