Handling Fraud Management In-House
When it comes to selecting a fraud management approach, should your business use an in-house team or an outsourced approach? It’s a big decision — and it’s one that can significantly impact your company’s susceptibility to fraud.
Let’s look at why a merchant might consider keeping an in-house fraud team and if that decision makes sense.
1. You need to have total control over the entire fraud management process.
If you’re concerned that no one knows your business better than your own employees, it may be in your best interest to hand-select an internal team you have control over and confidence in.
When in-house staffing is done well, you can build a skilled team that’s devoted to fighting fraud.
Notably, with insourcing, you have more control over the fraud criteria you use: You can determine which orders are flagged for review and which are automatically declined.
The risks: But ongoing training is critical for keeping the team current on evolving fraud trends; otherwise, you risk missing significant fraud events. You’ll also need to ensure your team has sufficient manpower to cover unexpected spikes in sales (while not staying overstaffed during slower times). Getting the team up and running requires dedicated resources and continued work, having a third-party solution allows the specialists to quick, convenient access when issues or attacks arise.
2. Budget and resources are not primary concerns.
If you have access to the right talent and the right systems, an experienced in-house fraud team may allow you to efficiently mitigate fraud exposure. Moreover, an in-house team will allow you to control all the costs.
The risks: The cash outlay to hire, train and maintain an in-house staff of fraud detection experts can be significant. You must also factor other important costs, such as IT hardware and software investments that will be needed to set up a monitoring and review system for your team to use.
There may also be indirect/soft expenses tied to false declines, which may occur if your fraud team gets over-enthusiastic and inadvertently turns down valid orders that appear on the surface to be fraudulent. These false declines not only reflect lost sales opportunities, they can also lead to disgruntled customers who don’t appreciate their order being declined.
3. You are concerned about protecting sensitive data.
Companies who are concerned about privacy, data loss and confidentiality may feel more comfortable using their own, in-house fraud team.
For example, merchants in the health care industry may have access to sensitive consumer data that is federally protected for privacy. Sharing this information with company employees might seem less risky than sharing it with an outside vendor, even though your actual fraud exposure is the same.
The risk: Because service providers are specialists on handling data, many times they have better data protection polices and resources than the merchants themselves.
Weighing the Costs of In-House Fraud Protection
Deciding how to source your fraud management can be complicated. Your company’s circumstances will help guide you to the right fraud protection decision.
Are you prepared to handle your own fraud management tasks 100% and chase frequent changes in fraud patterns, while maximizing fraud protection and approval and conversion rates? It’s a big investment that requires financial and intellectual resources to both hire experienced fraud prevention staff and then keep their skillsets current.
Clearsale’s comprehensive approach can cost-effectively help companies of all sizes protect themselves against fraudsters. Contact one of our fraud protection analysts today to learn how our Total Guaranteed Protection can add security to your sales. Email us at email@example.com to get started today.