In the fraud community, many still see digital identity resolution primarily as a way to reveal and block the bad actors behind fraud and policy abuse. But the true power of understanding digital identities goes well beyond that.
Used to its fullest, identity resolution provides a way to not only combat fraud and policy abuse, but also to create opportunities for ecommerce growth.
Digital identity can be a powerful tool for building loyalty, personalizing the customer experience, recognizing customers across channels, and most important, preserving the generous policies that make a business competitive. And yes, it can also safeguard your business against scammers.
So what’s holding merchants back?
The risk calculus of generous policies
Riskified’s policy abuse benchmark report reveals a big dilemma for merchants.
Ninety-three percent of respondents said it’s important to offer generous refunds and returns to win new customers and retain loyal ones. But the costs of maintaining those policies in the face of rampant abuse are causing many to abandon their pro-customer terms and relinquish competitiveness as a result.
Compounding the problem is that there are regular consumers in the mix alongside the professionals. For example, in a recent survey by Riskified and Sapio, 53% of consumers who have misused policies say they have used multiple email addresses to reuse coupons or discounts. It can be hard for merchants to distinguish the behaviors of otherwise profitable customers from criminal fraud, which leaves them little room for grace.
That’s why digital identity isn’t just about discerning names and addresses. It’s about identifying patterns of behavior and how they interact in the digital world. With a more nuanced understanding of identity, you can begin to assess risk on an individual basis instead of simply giving up on policies that invite abuse.
When you have visibility into identity and trust what you are seeing, your various departments – from fraud to customer care – can make highly calibrated decisions that favor good customers without putting profitability at risk. Getting that visibility will require teamwork.
Networks are the future of identity
As we learned from discussions at various industry events including Ascend, and in particular through the insights of experts like Alex Hall, the methods, determination, and creativity of the fraud community remain remarkably sophisticated. And it is indeed a community, a team sport characterized by collaborations and sharing among scammers.
One weakness fraudsters have traditionally exploited to obscure their identities and get away with fraud is a lack of visibility across merchants and digital businesses. So if merchants want full understanding of customer behavior, both legitimate and illegitimate, they must also act as a team.
Only by looking at behavior across retailers do key patterns begin to stand out, which is why businesses and other entities are increasingly turning to network data. They are joining a global merchant network to stitch together a more complete picture of ecommerce behavior in general.
Using network-wide signals, you can get to know your customers better and calibrate friction to favor them. Networks can reveal what’s “normal,” and provide profiles to inform growth-oriented policies and strategies across the business, from marketing to customer service.
A networked approach to identity is becoming the direction for the industry in order to not only create an inhospitable environment for fraud, but also a better space for growth-positive commerce. At Riskified it, a vast global network model is built into our technology.
Making identity pro-customer, not just anti-fraud
Identity insights based on network data are rapidly becoming essential for merchants to remain competitive in ecommerce. Understanding and acting on identity insights creates an environment where merchants can confidently return to the generous policies good customers desire, get even closer to those customers, and quiet the noise of continual abuse.
Merchants that partner with Riskified are ahead of the curve in solving policy abuse with identity insights, leveraging our AI platform to detect abuse in real-time and diverting the losses from bad actors toward rewarding their best customers.
For a fascinating look at fraud from the inside and how to protect your business, check out Ask me anything: Insights from ex-fraudster Alex Hall.
