How Goldspeed.com races to keep ahead of online thieves
Thieves use the Internet as more than a hunting ground for goods—they also use it as a way to share information on vulnerabilities in the methods different retailers use to validate online orders and how to take advantage of that, Neil Kugelman, CEO of online jeweler Goldspeed.com, tells Internet Retailer.
“Credit card thieves don’t work in a vacuum. They are connected by the Internet.
It’s not that they just use the Internet to place orders and hide behind the anonymity of the web—they use it to communicate with each other,” Kugelman says.
Kugelman says organized thieves have web-based bulletin boards in which they post information about the credit card verification process at individual retailers. On the boards, credit cards advertised as “with the correct street address and CCV number on the back”—are offered for sale, he says.
As part of their efforts to police orders at Goldspeed, No. 362 in the Internet Retailer Top 500 Guide,
Kugelman says he and his team have been able to log onto some of bulletin boards and have seen “amazing things.” One example: a large, well-known web and store apparel retailer was referenced, along with the posting that online orders below a certain dollar value threshold were being fulfilled automatically by the retailer with no further screening.
“When a thief finds a hole like that, not only does the retailer have to worry about that order, but it’s now been communicated to thieves around the world. They sense vulnerability and they jump—so quickly and at such a rate that you may not be able to respond as quickly in plugging that hole,” Kugelman says.
Kugelman adds that the first order ever received by Goldspeed.com was fraudulent. That’s one reason order verification is a top priory at Goldspeed, he says. That, and the fact that as a product category, jewelry is high-value, easily transportable and easily fenced, making it a prime target for thieves.
In response, Goldspeed has developed a process including an electronics screening using proprietary algorithms to score all orders, which keeps Goldspeed`s chargebacks down to a fraction of 1%, Kugelman says, though the rate of orders representing attempted fraud is about 30% of the orders that come in. Kugelman notes that his team keeps extensive notes on the orders that don’t pass electronic screening and are passed to manual review.
“We rarely get chargebacks,” he says. “And when we do, in most cases we are able to respond in such a way that they are reversed.”
Kugelman won’t disclose what he spends to validate orders, but says the expenditure is unquestionably worth it. “The typical person who places an order is usually concerned about the price. Some who place fraudulent orders aren’t concerned, so they could be placing a very large order. So the loss we face could be astronomical,” he explains.
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