Read the State of Fraud Report
Signifyd CEO Raj Ramanand reminded a packed Collision audience that fraudsters are entrepreneurs who like any business leaders respond to market conditions and macroeconomics.
Ramanand took the audience in Toronto through a discussion of where online retail is headed in this odd inflection point between COVID — which is apparently over, but which will not go away — and what comes next.
“I think retailers have to start getting prepared for a little bit of a new world,” Ramanand said during a wide-ranging conversation with Yahoo Finance Senior Report Alicja Siekierska, “but generally there are three things that become pre-indicators of what is to come for retail.”
Increased fraud, consumer abuse and account takeovers are in our future
Citing Signifyd data, Ramanand said that online retailers are already seeing increased fraud attacks, a higher number of attempts by consumers to game the system and a rapidly growing trend featuring the takeover of online accounts by criminal fraud rings.
Those are trends that are likely to persist as financial pressure builds in the face of inflation, the war in Ukraine and a potentially tightening job market.
“It definitely is fueling more fraud,” Ramanand said of the souring economy. “I think this is hard to predict. If we all were really clear about the future, we would be in Vegas, not on the Collision stage, but the point is you’ve got a few things that are happening in the world.”
Yahoo Finance Senior Reporter Alicja Siekierska spoke to Signifyd CEO Raj Ramanand at Collision 2022 about the current state of ecommerce fraud and where the state-of-the-art of fraud protection is headed. You can watch the entire interview here.
In the end, world events affect everyday people. There will be those, Ramanand said, who will make a purchase and then have buyer’s remorse. They may see filing a chargeback — asking a credit card company to reverse a charge due to a problem with an order — as a way to erase the regret of spending, while still keeping a product.
And there will be those who will find themselves in desperate straights.
“No one wakes up thinking they want to commit fraud,” Ramanand said, ”but fraudsters have found a way to do things.”
He pointed to the practice of romance fraud — scams that can take years to pull off, in which a fraudster creates an insincere romantic connection online with a victim who then acts as a conduit to receive and reship fraudulently obtained goods.
Collision is about solving future problems today
Not a cheery topic, but somewhat in keeping with the tone of Collision 2022, a massive innovation conference in Toronto where 35,000 attendees heard from nearly 1,000 speakers. And while the uncertain economy was an unavoidable topic, Collision is about inventing the future and finding solutions to inevitable challenges.
It is the sort of mindset that helps those who speak at Collision find themselves in a position to be charting the course forward, no matter the circumstances. Ramanand said he often thinks back to how he got into the commerce-protection business in the first place.
“I’m a big Taco Bell fan,” he said in response to a question from Siekierska. And early in his career, while working for FedEx in Memphis, he got a call from the local economics crime division which alerted him to fraudulent charges on his credit card.
“The person at the Taco Bell counter was collecting cards and then going off on the Home Shopping Network and buying a ton of things,” Ramanand said the economic crimes detectives explained to him. “And it fascinated me that the Home Shopping Network could be able to connect the dots by just looking at all this pattern of behavior.”
How Taco Bell helped launch modern fraud protection
And so, he began building systems to protect businesses, first at FedEx and then at PayPal — and of course at Signifyd — ensuring that good customers are able to buy and that online merchants are able to realize those sales and the revenue that comes with them. It’s about, as Ramanand said on stage, optimizing the conversion funnel.
“We are helping optimize that funnel,” he said. “Merchants are spending millions and millions of dollars on CAC (customer acquisition costs) and acquiring a new customer.”
The last thing you want to do is turn that opportunity away.
“You’ve spent all these marketing dollars to acquire it. Why can’t you find a way to convert more of them so that they become lifelong customers, high-value customers, for you in the mix. And we do play a big part in that.”
And that is the path forward, to keep with the Collision vibe. Whatever the economic headwinds, merchants control a valuable revenue lever. Ramanand asked the audience to consider a merchant growing at 5% to 8%. Now, what if it’s also declining 2% or 3% of its business because it believes those orders are fraudulent — when only a small fraction of those orders actually are.
Commerce protection technology is about maximizing revenue
“One of the growth levers in the business for retail automatically becomes unwinding everything you currently do and saying, ‘Why don’t you just offer up something that approves more while taking the liability away from the merchant?”
Ramanand knows something about a solution that can do just that. Intelligent technology solutions are changing the equation for online retail and innovation is accelerating. It’s reason enough, Ramanand said, to look past the negative.
“I think it’s a very positive environment. And yes, there’s doom and gloom that people always consider. But this is the best time to really build efficiency in the business if you’re in retail. I think it’s a huge opportunity for retail right now.”
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