June 21, 2012, 11:28 AM

A fraud prevention tool saves BustedTees time reviewing suspicious orders

The retailer says most manual reviews take less than 30 seconds.

Katie Evans

Managing Editor, International Research

Lead Photo

BustedTees had a problem common to many growing retailers—more orders also meant more fraudulent orders.

The retailer’s chargeback rate last year reached 2% and its chargeback fines from payment card companies swelled to $2,000 per month.

“As the cost of the fraud grew, we tried to fight back by building our own technology and systems,” says Adam Schwartz, general manager at BustedTees. But the time it took to review each order took away time BustedTees could have used to grow its business.

 

 

That’s what led the retailer to implement a fraud prevention service from Kount Inc. to help it streamline the manual review process. The system, called Kount Compete, took about two weeks to implement, and automatically flags suspicious orders. Within six weeks, BustedTees says its chargeback rates fell to lower than they had ever been and it no longer incurred chargeback fines from card companies.

Kount uses several fraud prevention tools, including device fingerprinting and risk-scoring tools, to flag suspicious transactions. Because it provides more data about each flagged order, it’s easy for BustedTees to make a decision on whether an order too risky to process, Schwartz says.  

“Before Kount, we’d flag about 10% of transactions for manual review,” he says. That percentage has dropped to as low as 7%, but those reviews take much less time because Kount collects data that BustedTees previously had to gather on its own, such as where the order came from. “Kount provides so much data that 90% of the time a review just takes 30 seconds,” he says. “In short, we spend half as much time as we used to on manual reviews.”

The vendor’s fraud prevention and reporting tools also has helped BustedTees increase sales by selling in international markets it used to avoid because it thought they were too risky.

“Because we are confident that Kount will catch fraud, we’ve been able to experiment with our rules,” Schwartz says. “We added 30 high risk markets we used to avoid due to fraud concerns. “Now we are getting lots of sales from those markets, but no higher fraud.”

BustedTees also has been able to use the data it gets from Kount in other ways. For example, by using Kount, it was able to easily see that it had more German customers than it thought. So it deployed a German language promo on its home page, which helped increase conversion rates  25%. “We’re also experimenting with geo-targeted ads to increase ad efficiency,” Schwartz says. “Our business has grown 40% to 50% and Kount has been a big factor in that growth.”

BustedTees’ chargeback rate is now less than 0.5% and the retailer’s sales have increased because it is now turning away fewer good orders. Additionally, the time the retailer spends on manual reviews is about half of what it was before using Kount.

“Fraud was costing us hundreds of thousands of dollars a year, lost revenues, stolen merchandise and chargeback fines,” Schwartz says. “Kount turned that around to the point that we are now generating more revenue because we can capitalize on opportunities we used to see as too risky.”

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