Marilyn Monroe said/sort of sang it a half century ago: Diamonds are a girl’s best friend, and of course her fiancé’s best friend. And could they also be an online fraudster’s wallet’s best friend? Consider the fact that making off with just one purchase means that thousands of dollars can be stolen in a single fraudulent transaction.
In an interview with PYMNTS’ Karen Webster, James Allen Schultz, co-founder of online custom jewelry site James Allen, stated that it adopted Forter’s decision-aiding technology platform, with machine learning in place, to evaluate transactions and help alleviate friction in the transactions themselves. The end result? A double digit percentage improvement in (already low) chargeback rates and a 1.5 percent boost to approval rates in transactions themselves.
KW: This is a fraudster’s dream … you can make a lot of money; how big of a deal is fraud in your industry?
JS: You know there's very few things in this world that can be worth over $100,000 and you can put inside of the FedEx box. So there's certainly the allure there and with diamonds either loose diamond jewelry it is also something which if it gets in the hands of the wrong people — a fraudster in this case — it can be fairly easy easily turn into cash. … We have to be very vigilant about making sure that we protect ourselves.
As far as prevalence goes it's really a very, very small percentage of our orders. We run a fairly high volume operation here and using all of our manual techniques in ordering and everything else … I don't think that we identified potential fraud as being more than a couple percentage points of the business, and even that might be an overestimate.
The issue that we have is that we have such a high average ticket that if only one fraudster gets through per day – and that ticket is a $10,000 ticket — you know you very quickly have a multimillion dollar problem on your hands.
KW: You have attracted a very high-end buyer, someone willing to put $10,000 on their card … they want their card to be approved, they want friction to be removed. How do you manage experiences on the customer side but still protect your flank?
JS: Well there's a few different ways. It's funny that the young man will spend on average up to six weeks researching to try to find the absolute most perfect diamond engagement ring for his bride-to-be, but then once he finds the ring it needs to be here tomorrow.
I actually would characterize our customer base is not necessarily affluent. … They are a younger generation, they are people that are comfortable with the idea of purchasing something online. For the most part you know they're buying what may be the most expensive thing they purchase outside of a car … the first answer to your question is that we try to give people realistic expectations from the onset. We say to our clients through our website that if you order this, it probably will take a couple days before we get it out to you. If you order this particular ring it might take five days, seven days, 15 days, depending upon the style.
One of the reasons that we introduced Forter into our solution set last year was because manual review does take time. It requires going back and forth with the client, and while a day here and there doesn't sound like much it's enough to turn a positive experience into a sour one.
KW: Beyond the 15 percent chargeback improvement noted in the case study, were there other things that prompted your review of your existing process and said “I want this out of my hands and into someone else's?”
JS: I said to [Forter] many times that I don't have a chargeback problem — we had a customer service problem. In our minds we were asking what was becoming an unreasonable number of customers to prove that they were who they said they were. We didn't want to put one more stop on the train, to have to say to them ‘so now we need you to send us additional information. [Signing on with Forter] made our team much more efficient and gave us the ability to process a much higher level of transactions with the same number of people.