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It’s Time to Stop Absorbing Ecommerce Fraud Losses as the Cost of Doing Business!


Due to operational limitations, many merchants leave money on the table for fraudsters – there is a better way!

Cyber-fraud is on the rise and as a society we have accepted it as a sad truth.

Fraudsters are opportunists, well-equipped and extremely motivated to execute fraudulent schemes with great precision and sophistication. We have all witnessed many reputable organizations and even three-letter government agencies fall prey to fraudsters and hackers. Sadly, we have become somewhat immune to the news about cybersecurity hacks, ransomware attacks, and identity theft schemes as if we were expecting cybercriminals to prevail over our defense mechanisms.

This is a vast topic and as such I will keep the focus of this blog on B2C merchants who sell products and services online. The bottom line is that when there is money to be made, there will be fraud. Also, we have seen fraud levels increase in challenging times, such as in recessions and more recently during the Covid-19 pandemic.

A lights-out level of automation does not exist in fraud prevention tools.

Over the last five years, almost all fraud tool vendors have updated their offerings to include some AI and machine learning-related enhancements. Some vendors have built good data models and workflows for different industry verticals that can work quite well in less complicated environments. However, most vendors continue to pay lip service to automation via “creative” marketing campaigns, while privately acknowledging that a lights-out level of fraud automation is a wish that will not come true.

Fraud prevention departments have built avoidable fraud losses into their operating model by relaxing fraud rules and accepting losses as the cost of doing business.

Below are a few reasons stating why Trust and Safety teams must build and leverage intelligent human-machine partnerships: 

  1. The main mission of Trust and Safety teams is to ensure that legitimate transactions are quickly released, while fraudulent transactions are intercepted and rejected. This is a mission no fraud tool can accomplish without a seamless human-machine partnership.
  • AI and machine learning models are as good as the data they rely on. Consumer behaviors, shopping habits and seasonal trends are constantly changing, when it comes to online shopping, thereby making fraud prevention algorithms extremely unreliable without some degree of expert human intervention.
  • Fraudsters and cyber gangs have equal access to technological innovation to learn, adopt and circumvent security measures that are available in most sophisticated tools and platforms. Never-ending streams of fraud schemes make it mandatory for fraud departments to manually inspect riskier transactions, learn new insights, and feed them back into the algorithms.
  • With all due respect to Trust and Safety teams, fraudsters and cyber gangs have a greater  motivation and determination to commit fraud. They are not constrained by shift timings, human talent or income potential. In a way, they probably have an ideal human-machine partnership that is often lacking in many fraud prevention departments.

Allocating customer care staff to assist with fraud screening tasks is a common and perhaps most damaging business practice.

Higher operations costs force Trust & Safety teams to accept undue fraudulent losses.

Personnel cost is the largest contributing factor in a fraud department’s budget. It is not just about the salaries of fraud prevention analysts but also the time and effort it takes to hire, train, and on-board regular and seasonal staffing throughout the year like clockwork.

Unfortunately, due to the absence and scarcity of fraud analysts in an organization, avoidable fraud losses are built into the operating model of fraud departments by relaxing fraud rules and accepting losses as the cost of doing business.

Lacking adequate human talent, here are examples of some trade-offs that result in a lot more than financial losses:

  1. Fraud tools fall short and fraud is allowed
    1. Fraud prevention tools are thrown off balance during busier shopping seasons as data models they rely on for automated decisions become highly unreliable.

    2. Rejecting a customer’s legitimate transaction results in loss of revenue, goodwill, and future revenue potential with that customer. It becomes a reputational issue for the merchant and negative emotional experience for the customer.

    3. Allowing a fraudulent transaction costs the merchant a lot more than the transaction value: chargebacks fees can range between 3% to 4% of the transaction value; time and effort spent on processing the transactions put a further drag on razor thin profit margins.

  2. Trust and Safety teams fall short and fraud is allowed
    1. Most fraud departments do not have sufficient team size of fraud analysts on staff to manually review riskier transactions, hence fraud is allowed.

    2. Most merchants scale up staffing by either hiring temporary staffing and/or requiring customer care staff to help out with fraud-fighting mission. Below are among common practices that are insufficient and inadequate on many levels:

      1. Time and effort spent on hiring, training and on-boarding fraud analysts is a costly and inefficient practice: it can be quite costly to attract, hire and train appropriate talent. Newly hired temporary staff usually delivers ‘hit or miss’ results, thereby falling short of meeting hiring objectives.

      2. Unfortunately, allocating customer care staff to assist with fraud screening tasks is a common and perhaps most damaging business practice to an overall organizational mission. It takes their focus away from delighting customers, building relationships, and earning repeat business. Also, most customer care representatives do not perform well in back-office fraud prevention roles.

Our fraud analysts screen high-risk transactions, decline fraudulent transactions, release legitimate transactions, and even fight chargebacks as a trusted remote team.

CES enables Trust and Safety teams to fight fraud at lowest cost.

Fraud prevention services vendors must help Trust and Safety teams meet and exceed their mission critical objectives in a transparent, objective and seamless teaming manner.

  1. Primary goal of Trust and Safety teams is to significantly reduce financial losses attributed to fraud and chargebacks. This goal should not be achieved by tightening fraud rules.
  • They are under intense organizational scrutiny to not decline legitimate transactions and insult customers – customer insult is an industry term for wrong declines. Relaxing fraud rules and allowing fraud is like leaving money on the table. Nobody should do it.

CES differentiations include:

  1. Fixed and predictable monthly fees: Unlike many fraud prevention services vendors, CES does not require merchants to give up a percentage of their precious online revenue. We have a low-cost, straightforward, transparent business model that is based on team size.
  • Team of experts: Our experienced and dedicated ecommerce fraud analysts screen high-risk transactions, decline fraudulent transactions, release legitimate transactions, and even fight chargebacks as a trusted remote team.
  • Flexible operations: Ramp up and down fraud analysts as per the need of the business, thereby minimize time and efforts spent on temporary staffing. Also, keep customer care representatives focused on what they do best: delight customer and help grow revenue.
  •  No long-term commitment: There is no long-term contract. Unlike some vendors, customer entrapment is not our mode of conduct at CES.
  • Valuable extras: Here are a few examples of value-additions without any extra fees:
  1. No account management and project management fees
    1. No set up, training and on-boarding fees
    2. No extra fees for nights, weekends or coverage during holidays
    3. No cost or commitment for a POC (try before you buy)

For more information or a conversation on how CES can build a team of analysts for fraud detection, please contact or get in touch with us at