Riskified Shows that Policy Abuse Is The Newest Threat to Southeast Asia’s E-commerce

Southeast Asia is set to enter an exciting yet challenging new phase in its e-commerce journey. The number of digital consumers in the region is projected to hit 402 million by 2027 with Indonesia leading growth, followed by the Philippines, Vietnam and Thailand. In fact, the region’s rapid e-commerce development has been likened to China’s!

In the post-COVID era, Southeast Asia’s tech-savvy consumers are buying a wider array of products online across diverse channels, while tech platforms and merchants battle it out for a greater share-of-wallet. In a soft macro environment, online merchants and e-commerce players must prioritise profitability in addition to maximising consumer growth and lifetime value.

To entice new customers and maintain loyalty online retailers are locked in a policy arms race. They offer generous return policies, promotions, affiliate programmes, flash sales and more. These have become the norm, enabling e-commerce players to remove barriers to purchase and increase consumer confidence.

However, retailers are now feeling the pinch and these liberal policies may soon cause a race to the bottom instead!

Policy Abuse: A Case of Good Customer Strategy Gone Bad

As companies rush to be more consumer-centric, the creative strategies used to grow their customer base have spawned the opportunity for abuse. Policy abuse refers to consumer misuse of retail policies such as return policies, coupons and loyalty programs. It includes behaviours such as excessive returns, refund scams such as claiming an item was not received or returning empty boxes, abusing promotions like coupon codes or loyalty program rewards, or reselling limited-inventory items.

Today, online retailers feel trapped between maintaining these policies to keep loyal customers and dwindling profits. A study by Riskified showed that a whopping 90% of online retailers are losing money to policy abuse and believe that it is a significant threat to their bottom line.

In addition to lost merchandise, policy abuse also leads to operational challenges for merchants. Processing returns and refunds tend to be a largely manual process, representing a huge productivity drain for merchants. It takes most retailers (68%) 3-4 days to process a refund or return.

Unleashing SEA’s E-Commerce Growth

E-commerce has numerous complicated and expensive friction points. While most retailers focus on point-of-sale and transaction fraud, they tend to forget the many other vulnerable touch points along the journey. Policy abuse is one such touchpoint that impacts profitability.

Policy abuse is unique in the fraud landscape because, unlike traditional fraud, it can be committed by people who are otherwise good customers. In many cases, policy abuse requires no special skills or access to stolen credentials or accounts and is not a criminal offence.

The key to solving this challenge is resolving the true identity of the consumer, extending trust and frictionless experiences to good customers while curbing the abusers, and stopping the fraudsters.

Managing Policy Abuse with Riskified

Established in 2013, Riskified helps leading e-commerce merchants maximise revenue and profit with their AI-powered fraud management and risk intelligence platform.

Riskified’s Policy Protect leverages powerful machine learning clustering technology to reveal the identities behind individual accounts and analyse their behavioural patterns across Riskified’s vast merchant network. The solution automatically delivers optimised policy decisions in real time to every single order and claim.

Using Policy Protect merchants can distinguish between good customers and bad actors who are abusing a merchant’s terms and conditions. With this information, merchants can offer more generous policies to those customers who genuinely deserve them while effortlessly and scalably filtering out unprofitable or untrustworthy identities.

Using Policy Protect, many leading retailers have saved millions of dollars blocking e-commerce policy-related abuses. Merchants have been able to prevent 15x more abusive returns and refund claims, detect nearly 95% of unauthorised resellers, and save 70% of their promotion budget by thwarting shoppers from misusing coupons and promo codes.

Riskified Fast Facts

• Established in 2013, Riskified has 700 employees across the globe. In Asia, Riskified is present in Singapore, Shanghai, and Tokyo.
• Riskified supports hundreds of merchants in retail, luxury fashion, travel and digital goods to future-proof their e-commerce business including Acer, Alibaba, Agoda, Gucci, Prada, Burberry, KKday, Nikon (HK), Avia Games, Bunnings, JB Hifi, David Jones, EB Games, Chow Sang Sang, Ctrip and Spring Airlines.
• Riskified offers a suite of solutions including Policy Protect, Chargeback Guarantee, Dispute Resolve, Account Secure and PSD2 Optimize.

For more information on Riskified, please visit this website.