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from you,” said Myers. Micro Center operates 23 large stores in major markets in the US, alongside an online store with an in-store pickup of web orders option. Founded in 1979 in Columbus Ohio, the retailer targets the dedicated computer and consumer electronics user. The company’s website generates almost $2 billion in annual sales and rapid growth has meant an increase in fraud. A particular target has been the company’s
18 minute in-store pick up option, which allows customers to purchase online with a credit card and collect in-store. This initially invited fraud, as criminals took advantage of the fact that the company’s in-house fraud prevention system would not be able to pick-up a stolen credit card in such a timeframe. “The 18 minute pickup, even though it contributed to our sales growth, it had unintended consequences,” explained Myers. “Initially, our in-house fraud programme based
on free technology kept us well below the 1% chargeback rate.” However fraud increases drove increases in the Micro Center payroll cost, as staff was hired to manually review a number of credit card orders before they shipped. The rapid increase in fraud also increased the company’s chargeback rate dramatically. “Ultimately, our customer service suffered as our
increasing ‘paranoia’ started affecting good customer transactions. We were declining good customer orders and our customer service declined.” After a couple of particularly interesting fraud cases - one of which involved a woman in New York stealing $ 6,000 worth of Apple Goods with a stolen credit card through the 18 minute pick-up service on behalf of a client in South Africa – the company admitted defeat. “We realised that our internal resources had no
ability to target that kind of fraud,” said Myers. “We had bad guys operating in South Africa, placing ads,
echnology
hiring mules paying them 250 bucks and supplying them with fraudulent credit card information to steal from us.” The company went in search of a fraud prevention provider that was in line with Myers’ law enforcement background of delaying, detection and deterring criminal behavior. The company deployed the Kount Complete fraud management solution. “Kount gives us information on a transaction that’s like evidence of a crime scene,” explained Myers. “That information involves device fingerprinting
alongside other kind of link analysis, some sort of behavioural analysis. Kount’s Persona technology is very sophisticated. If I identify one fraudulent transaction, Persona can link other fraudulent transactions through information like victim name and address, email, the device fingerprinting, the ‘ship to’ address and other identifiers.” Kount also introduced Micro Center to the level
of international crime it was exposed to. “Fraudsters use technology such as IP proxy locations and we had no eyes to that information before. So our Kount platform allows for early detection of fraud and it falls right in line with our policy of delaying, detecting and deterring fraud,” said Myers. “Since we started to focus on credit card fraud
and card-not-present fraud, we’ve reduced our chargeback rate to below 4% since 2012. We’ve had a 25% increase in sales and are projecting a 30% increase this year in online sales. Right now we have a 40% reduction in card-not-present losses, that’s dollars. And we’ve seen a 75% reduction in card-not- present chargebacks as a whole,” concluded Myers. “We’ve reduced manual reviews by 50% and
reduced our payroll expenses dramatically and refocused those employees on improving orders and sales. Lastly, the information we can gather is crucial to the prosecution of cyber criminals. I want to send a strong message that we’re not easy to steal from.”
www.retailtechnology.co.uk
Autumn 2014
29
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