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Why Fraud Prevention Downtime is Costly

posted on: Fri Jul 14 2017

99% uptime sounds pretty good, right? But if you take a moment to calculate what that means, you’re looking at more than seven hours of downtime a month. That’s nearly an entire workday, every month.Offline

Imagine if you were forced each month to pick one workday that you had to sell without fraud prevention. Even if you picked your slowest day of the month, you’d still feel pretty exposed. But what if you didn’t get to pick the day? What if you had to sell without fraud prevention on your busiest day of the month because that just happened to be the day of the outage?

That’s why Kount targets 0% planned and unplanned downtime, and why Kount has averaged 99.99691% uptime or high availability over the past three years, or less than 2.2 minutes of downtime per month.

We know how critical fraud prevention is to maintaining profitability for your eCommerce operations. Yet some fraud prevention providers routinely experience frequent and lengthy outages. All we can say is that the merchants experiencing that type of downtime expose themselves to financial loss in at least five ways.

  1. Manual Reviews. When automated systems go down, a typical default response is to conduct more manual reviews until the system is restored. However, manual reviewers and the manual review process are the most expensive part of most fraud prevention budgets. If you are compensating for repeated fraud prevention system outages by increasing your manual review staff, you are increasing costs and hurting profitability month after month, year after year. On the other hand, if you are not adding staff but relying on existing headcount to handle those spikes in transaction volume, you’re probably losing revenue due to slower order approvals and/or higher false positives. What’s more, our experience has been that fraud rates and losses are much higher when manual reviewers are forced to handle higher-than-normal transaction volumes. All in all, it’s a lose-lose-lose situation.
  2. Card Testing. One Kount customer recently recounted being hit by powerful and sustained card testing attacks out of Vietnam. The shopping cart amounts were low (because it was card testing) so product losses would have been bad -- but not devastating -- if that customer had been experiencing an outage at the time. However, the cost in chargeback fees and the negative impact on their chargeback rate would have been truly damaging.
  3. Holiday Hit Jobs. Many eCommerce businesses will process two times, three times or even 10 times as many transactions on peak days like Thanksgiving, Black Friday, and Cyber Monday. That’s why fraudsters target those days, looking to “hide” amidst the higher transaction volumes. For example, a sampling of Kount merchants after the 2016 holiday season indicated that fraud attacks were more than 100% higher during that time, compared to the previous year. If you are like many merchants and loosen constraints or increase the ticket amount that triggers a manual review, you could suffer huge losses due to an outage during peak selling days.
  4. Brute Force Attacks. A Kount customer experienced a massive attack in which fraudsters attempted more than 29,000 fraudulent transactions in the 24-hour period after Christmas Day. More than seven hours of downtime during this onslaught would have cost them tens of thousands of dollars in lost merchandise and chargeback fees. For smaller online businesses, an unfortunate intersection of a fraud prevention system outage and attack of this magnitude would likely be fatal.
  5. 500 million computer devices are infected by botnet attackers each year. The creators of the Zeus botnet sold it to various criminal gangs who used it to steal more than $100 million. Cyber security firms estimate that botnets, over time, have resulted in more than $110 billion in losses to victims all over the world. In the 15 seconds it took you to read this, 324 computer devices were compromised by bots. In other words, if let your guard down for even a minute, you are exposed to millions of potential fraud threats.

We recommend taking the time to ask your fraud prevention vendor how much downtime they have and reference this handy chart for comparison. Think about your operations and if you can afford a surge in fraudulent orders for the amount of downtime you are experiencing. After all, every minute can result in lost revenue and exposure to fraud.

Availability %     Downtime per year    Downtime per month    Downtime per week    

                Downtime per day 

99% 3.65 days 7.20 hours 1.68 hours 14.4 minutes
99.5% 1.83 days 3.60 hours 50.4 minutes 7.2 minutes
99.9% 8.76 hours 43.8 minutes 10.1 minutes 1.44 minutes
99.95% 4.38 hours 21.56 minutes 5.04 minutes 43.2 seconds
99.99% 52.56 minutes 4.38 minutes 1.01 minutes 8.66 seconds
99.995% 26.28 minutes 2.16 minutes 30.24 seconds 4.32 seconds
99.999% 5.26 minutes 25.9 seconds 6.05 seconds 864.3 milliseconds

 

Discover whether buying or building your fraud prevention solution is more viable in our new eBook "Fraud Prevention: The Cost Analysis of Build vs. Buy".

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