3 Tips for Using Big Data to Prevent Fraudulent Orders

Big data has become the buzzword for every industry and for good reason — it presents a big opportunity for businesses to learn and become more efficient. E-commerce is one of the best examples of a sector that strongly benefits from large amounts of data. By properly using the consumer identity information that's available to them, online retailers are able to quickly identify good orders, speed them to clear, and save time and money in the process. So why aren't more merchants using this type of data analysis?

Most large online merchants are already sophisticated big data consumers, but many midsized and smaller merchants rely almost solely on the Address Verification System (AVS) offered by the credit card brands. AVS is an important first step, but it leaves merchants missing out on the intelligence that other key pieces of consumer contact information provide. Where many merchants get stuck is trying to figure out what the necessary data points are and how to use them to conduct an efficient order review. Online merchants should follow these three tips to better use big data to identify good orders faster and speed them to clear:

1. Use what's available to you. The most important data points are most likely already in your online cart. That includes name, address, phone number, IP address, and potentially the customer's social media information, email address and device ID. Use an order review platform or identity verification tool that can validate if individual data points are legit and then cross-verify them against one another.

Here are three simple examples of discrepancies cross-verification achieves:

• Ship-to vs billing address: If there's a discrepancy between the two, you need to have a way to quickly determine why. Does one of those addresses belong to a relative? Are they shipping to their office?
• Billing address vs. IP address: If the billing address says Kansas, but the IP address is in Ghana, that's a red flag. Or if the IP comes through a "proxy," which masks the true IP location, that's another reason to be concerned. Most legitimate consumers don't use proxies.
• Phone vs. name: When you perform a "reverse phone lookup," does it match the consumer's name as presented in the order? If not, it could be a family plan phone or an example of identity theft.

2. Prepare for mobile. Due to current consumer habits, mobile phone numbers have become the new unique personal identifier. Similar to a social security number (but more global), a person's mobile phone number is one that typically stays with them for life. Having access to this data is paramount to verifying customer identities in the digital world. Using an identity verification tool gives you confidence in the reputation of that phone number, which can be very beneficial to your business operations.

3. Offer a mobile app. As The Fraud Practice has pointed out two years in a row in its mobile fraud survey, the mobile channel is experiencing higher fraud rates than desktop orders or point of sale. Mobile-optimized sites don't require the consumer to input the same degree of information as a desktop site, which creates a data deficit when conducting effective order reviews. Offering an app where additional consumer information is collected and can later be used for verification on suspicious orders easily solves that problem.

When you count all the ways that big data protects your company's bottom line, it becomes more than a just buzzword — it's a necessity.

Tom Donlea is the director of the e-commerce practice at Whitepages, the leading provider of contact information in North America.