Ethoca has announced that British Airways has joined the Ethoca-powered Global Fraud-Fighting Community through its service agreement with Royal Bank of Scotland (RBS).
Ethoca will provide British Airways with a resource of shared information containing positive and negative customer experiences. The aim: to identify bad orders much more quickly as well as identify good orders that are being rejected.
The airline hopes that this results in lower direct fraud costs; fewer resources dedicated to manually reviewing orders; faster order turnaround; fewer falsely rejected good orders (meaning higher revenues) and a better customer experience.
Having reached a tipping point around four years ago of customers transacting directly through its website versus sales through travel operator call centres or high street shops, British Airways decided to review its distribution systems and at the same time review methods of screening for fraudulent transactions.
Initial measures of fraud prevention included industry standards such Verified by Visa, MasterCard Secure Code and most recently PCI-related frameworks. As fraud became a more widespread issue, British Airways looked at further ways to complement existing fraud screening capabilities and turned to RBS
The Ethoca-powered Global Fraud-Fighting community will provide British Airways, other RBS partners and merchants of all sizes with a resource of shared information containing both positive and negative customer experiences, which enables them to identify bad orders much more quickly as well as identify good orders that are being rejected. The power of collaboration is such that cases where fraudulent information is used on several merchants in a short space of time would be all but eliminated. The more information that is shared, the better for the community.
"Ever since the Internet became a primary method of carrying out business, it has become harder and harder to discriminate fraudulent transactions from those made by honest, everyday people. This presented British Airways with the challenge of creating systems that can lower fraud rates but at the same time ensure customers have a positive online experience and don’t fall foul of strict screening rules," said Ken Muir, Global Payment Manager, Distribution, British Airways. "Ethoca represents on opportunity for us to learn more about how we can optimise our fraud screening process and gain the benefit of experience not only of those within the airline industry, but further afield too. RBS has been a trusted advisor to British Airways for many years and we’re looking forward to exploring this new ground with them and Ethoca."
Mike Parkinson, Manager of Global and Regulated Markets at The Royal Bank of Scotland said: "We continue to see momentum accelerate towards Ethoca’s collaborative fraud management community, with the recent addition of a number of large firms within the airline industry. By working together, members will gain previously unobtainable experience from their peers, giving them the knowledge to help drive down fraud and ultimately increase revenue."
"Fraud in the airline industry has grown rapidly with perpetrators evolving their methods as the airlines try to combat the problem. Duped, would-be customers turning up to airports with faked tickets has become a daily occurrence in today’s airports, but with British Airways joining the fight alongside the likes of Transavia, the clock really is ticking for fraud," said Andre Edelbrock, CEO, Ethoca.
"The Global Fraud-Fighting Community that Ethoca is powering now counts amongst its members some of the largest players within industry, all with a common cause: use strength in numbers to share and collaborate on experience gained over many years to dominate fraudsters and wipe out fraudulent criminality."
Fraud
Nearly 98 percent of online transactions are legitimate, the sopftware firm suggests, but most fraud management solutions focus on the fraudulent 2 per cent. To keep this fraud rate low, online businesses refer more than 27 percent of transactions for manual review. Yet after review, more than half of all merchants accept over 90 percent of these orders and two-thirds of merchants accept more than 80 percent. Put simply: the largest online businesses overspend by enormous sums to inspect orders manually, 80 percent or more of which could be saved if they had better customer experience data to identify the good customers and give them a better purchasing experience. Ironically, the current process costs a lot of money to protect against a small minority of actual fraudulent transactions.
The primary reason for such a large percentage of manually checked orders is a lack of prior experiences with the customer. Ethoca seeks to give information about customers who have yet to make a purchase from a particular merchant, and the only way to cut down on the 80 percent or more of manually reviewed orders that didn’t require checking. Manual reviews represent by far the largest cost of managing fraud, and are often the source of processing and shipping delays that degrade the customer’s experience.
The ability to quickly and automatically identify good transactions means lower direct fraud costs; fewer resources dedicated to manually reviewing orders; faster order turnaround; fewer falsely rejected good orders (meaning higher revenues) and a better customer experience. Most fraud tools, if they can deal with this problem at all, attempt to sort orders based on predictive scoring algorithms or evaluating other risk factors using scant information — in other words, they guess, rather than know — which is the primary source of errors both in accepting bad orders and refusing good ones.
Fuelled by the 20 percent annual growth rate in Internet shopping, customer-not-present transactions are rapidly becoming the primary source of payment fraud.
