With Growth Comes Risk

100 million+ monthly active users later, this unicorn knows firsthand why proactive fraud management is essential to global growth.

For any company pursuing an aggressive growth strategy, there are risks. These risks can be compounded when growth involves global expansion. Nowhere are these truths more evident than when it comes to fraud.

Growth almost inevitably invites fraud, as new vulnerabilities are opened up in the process of expanding territories and customer bases. The fraud and risk associated with growth become more complicated as new regions come into play, because new territories will introduce new fraud types, and new fraud actors.

DataVisor recently started working with a client to address the many risks they were incurring — and the financial damage they were enduring — in the process of aggressively expanding their operations.

The client is a global online food ordering and delivery platform with 100 million+ monthly active users and services in 20+ countries. The business was rapidly expanding into new territories, and encountering unique and evolving fraud problems in each new region.

Among the fraud challenges they were facing were promotion abuse and buyer-seller collusion. Fundamental to the client’s problems was the fact that attackers were consistently able to evolve their attacks to evade existing detection systems. Additionally, the business was encountering unique and previously unseen attacks types every time they expanded into a new region.

DataVisor identified several crucial challenge areas for the client, including:

New Market Risk
The client’s fraud team needed time to create new rules and train new models to address the unique risks in each new market, but that was at odds with the client’s desire to move fast. The result was that the company was not able to build adequate defenses, so their fraud losses worsened, and increased false positives negatively impacted their good customers.

Mass Registration of Fake Accounts
The client’s aggressive promotion campaigns attracted both customers and fraudsters, and the fraudsters were creating fake accounts at a massive scale to take advantage of the promotions using a combination of botnets and human farms to attack with high frequency at large scale.

Financial Loss Due to Multi-Party Collusion
Fake “customers” were making thousands of fake orders online, fake “merchants” were pretending to prepare food, and “riders” were reporting that they had delivered the food. All that actually happened, was that all of the parties received a vast number of subsidies from the platform, despite no actual food delivery ever taking place.

To solve the problems the client was experiencing, DataVisor’s systems were installed to begin holistically analyzing activities, accounts, addresses, digital fingerprints, and more, to expose suspicious patterns and coordinated activities. The results were dramatic. The company enjoyed a 300% detection uplift, and was able to capture more than 60% of fake accounts at the point of registration — before they were able to commit any fraudulent actions.

All told, the company saved $6M annually in potential fraud losses.

DataVisor recently produced a case study detailing the evasion techniques used by the fraudsters, and highlighting how advanced unsupervised machine learning solutions were used to neutralize the attacks and empower the client to successfully meet their growth objectives. You can download the report here.

This particular case study is just one example of how risk management and growth strategies go hand-in-hand. The use case also serves to point up the ongoing relationship between risk management and the broader topic of customer experience.

Striking the right balance between customer experience and organizational risk is one of the defining challenges for our digital economy as we head into a new decade.

For companies to grow successfully in the future, they’re going to have to put safety and security front and center.

In 2020, growth, customer experience, and risk management will be more intertwined than ever. Only those companies who — like our client — fully and proactively embrace comprehensive fraud management are going to achieve the ambitious growth goals that will define meaningful innovation in the new decade.