Case Study: Urban Outfitters: Winning The Battle Against Online Fraud

By Scott Richard, Urban Outfitters, Inc.

Fraud is more common in CNP purchases because of the anonymous nature of the transaction. The industry losses are significant because the merchant bears the full, financial responsibility for this type of fraud, including the value of the merchandise and penalties charged by card companies and card-issuing banks.

Fraudsters steal consumer identities and operate in rings to cover their tracks. They are adept at evolving their schemes to elude merchant controls and are constantly looking for ways to remain under the radar. For instance, many merchants review orders that request express shipping because many such orders have been linked to fraud. Knowing this, a fraudster might request standard shipping on a purchase then call customer service a day later complaining that the order was processed incorrectly. Without proper prevention techniques, the fraudster gets overnight delivery of the package without tripping merchant fraud alerts.

My goal was to reduce fraud losses by strengthening Urban Outfitters' fraud-fighting efforts. To accomplish this, we took a number of steps that began with a study of our fraud risks and involved in a tightening of our anti-fraud controls and procedures. We also partnered with Accertify, a company specializing in preventing CNP fraud, to help us apply a more sophisticated approach to intercepting fraudulent orders quickly so they can be cancelled before fulfillment.