How Inspire Brands, Albertsons and Helzberg Diamonds adapt to the everchanging challenge of online fraud

Ecommerce continues to grow, and with it an increasing risk of fraudulent activity. On the second day of NRF PROTECT 2023, a capacity crowd gathered to hear insights on negotiating the current online fraud environment.

Participants in the panel included Patrick Finnegan, director of loss prevention and fraud with Inspire Brands; Flora Garcia, director of enterprise data and fraud prevention with the Albertsons Companies; and Kevin Morrison, director of loss prevention, fraud and payments risk with Helzberg Diamonds.

According to recent figures from eMarketer, 20.2% of global retail sales in 2023 will come from online purchases. Meanwhile, a study from Juniper Research shows that the year is expected to generate a $48 billion loss from ecommerce fraud, 42% of it from U.S. retailers.

While their responsibilities vary from company to company and market to market, Finnegan, Garcia and Morrison all deal with issues around payments, the internal visibility of what they do, the need to understand the changing payment ecosystem, and the problem of card-not-present transactions.

They also share the need to protect their companies from fraud while avoiding friction with their customers — and avoiding friction with colleagues, whose responsibilities might lead to conflict with loss prevention and anti-fraud initiatives.

Morrison, whose company makes its money around heavily date-specific occasions such as the end of the year and Mother’s Day, notes that a certain amount of pressure from the sales force is almost inevitable. “They come to me and they tell me, ‘We need the ring, we need the ring, we have to get her the ring,’” he said, “and we don’t have final OK on the customer’s credit card.”

The panelists agreed that a partial solution is to foster agreement among departments as to what problems are being solved, or at least addressed.

“If there’s conflict between loss prevention and the sales force,” said Garcia, “we at least all need to be using the same data.” Inspire, for instance, has a cross-departmental digital fraud task force. “It’s a way to get people out of their silos,” Finnegan said. “We want to say yes.”

But you don’t necessarily want to say yes to everybody: There needs to be more unanimity about what constitutes a good solution. You can’t allow a store to profit off a chargeback, Morrison said, meaning that a loss of revenue for the company as a whole needs to be construed the same way for everybody.

One way to make that happen is to look at fraud as an overall business problem. That allows the fraud-busting department to champion the company’s overall sales numbers and act as a consultant to the operation. It isn’t there to say no — it is there to say yes, but to a better-behaved reality.

Part of this process, Morrison said, requires the people who dream up sales campaigns to run them by the fraud-prevention troops before announcing them to the customer base. The goal is not just higher sales numbers, but to integrate new solutions into the overall structure of the business, decrease fraud as a percentage of sales, reduce false positives for prospective customers’ creditworthiness and generally do more with less. “We can be competitive in the market, but allies in the battle against fraud.”