New Challenges in Fraud Prevention for Retail and eCommerce - with Joe Gelman of Riskified

In this episode, Matthew D'Mello interviews Joe Gellman from Riskified, discussing the changing landscape of fraud prevention in retail and e-commerce, especially as the 2023 holiday season approaches with projected online sales reaching $240 billion. The conversation highlights how the pandemic has influenced consumer behavior, leading to more liberal return policies while also creating new avenues for fraud. Joe explains the distinction between policy abuse—like exploiting return policies—and organized fraud schemes, emphasizing that while the former may not be criminal, it still poses a significant threat to retailers.

Joe reveals how pandemic-driven changes in consumer habits have normalized generous return policies, but these same policies are being exploited by some customers. He details instances of what he refers to as ‘first-party fraud’ and policy abuse, where customers may misuse return policies without necessarily being outright criminals. He also contrasts these behaviors with more sophisticated fraudulent operations that manipulate shipping systems and engage in more organized scams.

A pressing issue for merchants today, according to Joe, is parsing through vast amounts of data to distinguish between benign customers and malicious actors. He explains how Riskified employs a clustering technology to identify patterns and connections between accounts, allowing them to spot potential fraud while minimizing the risk of denying legitimate customers. Joe underscores the challenge of maintaining a balance between protecting the bottom line and preserving customer relationships, pointing out that there will always be a level of inherent risk in e-commerce.

As the podcast concludes, Joe discusses the ongoing cat-and-mouse game between businesses and fraudsters, where technology upgrades on both sides lead to evolving tactics. He acknowledges that while total certainty in fraud detection may be impossible, companies can improve their approach to risks by leveraging data smarter. Joe emphasizes the importance of understanding and adapting to the current landscape to deal effectively with fraud while still fostering a positive customer experience.