If you think that an online ordering website that deals mainly in third-party food, liquor and dry cleaning merchants doesn’t have to worry too much about fraud, think again.
As Colin Sims, COO of Delivery.com, recently told MPD CEO Karen Webster, the primary security concern for transactions on his site isn’t misrepresented funds so much as it is stolen credentials — and the company only has an 8-minute window to review orders that appear suspicious.
Because, of course, time is of the essence. Orders need to be processed and out the door in as little time as possible. And the fraudsters know that.
Increasingly, so do the delivery services platforms themselves. But there’s only one problem: as their volume grows, so does the pressure on their business to deliver as promised, and that can become problematic when that involves assuming the risk associated with authorizing real-time transactions within periods of concentrated order volume spikes each day (particularly as it pertains to meal times).
Or, as Sims puts it, “very unwieldy” for Delivery.com.
Noting that the site saw the number of fraud attempts rise year over year, Sims observed that “incremental changes in fraud do quickly overwhelm a proprietary system” — which was Delivery.com’s method at one point — “[and] that became a real drag on our resources.”
“It's not that we were incapable of handling it,” he adds. “It’s just that we have other things to do.”
Like deliver food in 30 minutes or less.
But that was just part of Delivery.com’s challenge. In addition to the time-sensitive nature of their business model, Sims explains that the site experiences potentially high levels of fraud because it is constantly acquiring new customers. Doing manual reviews is already a time-consuming process, but for a website dealing with so many new users that don’t have order histories, the option of rejecting those orders due to suspicion of fraud “creates a conundrum,” says Sims: To decline a legitimate first-time customer would increase the likelihood that he or she won’t become a second-time customer.
Businesses live and die by their ability to serve second-time customers (who become 20-time customers, who become 200-time customers).
Sims then contemplated something that he never thought he would do: outsource fraud services to a third party.
Having considered a number of different providers, Sims tells Webster that Forter’s chargeback guarantee tipped the scales in their favor. The ability to allow their business to focus on what they knew well, logistics and delivery services, to someone whose core expertise was fraud prevention – and who was willing to put their money where their mouth was if they approved a transaction that turned out to be fraudulent.
Sims adds that, before cutting the cord, Delivery.com actually ran Forter in parallel with its own proprietary fraud prevention system for comparison.
“They were much, much better at it than us,” he tells Webster. “It was pretty clear.”
Although Delivery.com represented a different type of business than most of the ones Forter had previously worked with, the company was up to the task of accommodating its model.
"Different businesses face different challenges, where Forter is concerned,” Aaron Begner, head of customer success at Forter, tells Webster. “For delivery, the real-time demand was key.”
And, as Begner explained, a core competency of Forter’s. Forter’s risk and fraud engine is set up to offer analytics-based fraud decisions in real-time – and without manual intervention.
Key in that regard, explains Begner, is that Forter's is “not a rules-based system.”
Because “every transaction is a unique story,” as he states, the company does not apply a fixed set of parameters across its varied merchant customer base; rather, Forter tailors its process to address each merchant’s specific needs.
“It's worked especially well for Delivery.com,” observes Begner, “because we've been able to provide that real-time solution with the decisions, to great effect.”
And to the benefit of Delivery.com.
“You forget, when you're in the thick of it, how much time you're spending on managing your own fraud tools, and how much of a drain on resources that is,” the Delivery.com COO tells Webster. “Now that we've stopped doing that, in retrospect, it's almost maddening to think about how much time we used to spend on that and how many other things we could have done with our developers instead of having them tweak rules on a weekly basis to adjust and account for the most recent fraud attempt.”
The added bonus for Sims is that the transition to Forter was not a difficult one.
“The integration work was not particularly heavy. All things considered, it was relatively painless,” concludes Sims. “Compared to what I'm doing right now — implementing an ERP — implementing Forter was a walk in the park.”