Up Close is Sourcing Journal’s regular check-in with industry executives to get their take on topics ranging from personal style to their company’s latest moves. In this Q&A, Eyal Raab, vice president of sales at e-commerce fraud prevention firm Riskified, discusses why the coronavirus pandemic has raised the need for risk management and how companies can balance e-commerce speed with security.
Name: Eyal Raab
Title: vice president of sales
Which other industry has the best handle on the retail experience? What can apparel learn?
I’ve been impressed with how so many retailers have adapted their businesses to the Covid-19 pandemic. Fashion has had a particularly difficult transition because part of the appeal—especially for high-end fashion—is the ability to go to a store and try things on. Brands have come up with some creative ways to deliver that kind of experience, such as having virtual fitting rooms and helping customers find their fit before they shop. Some fashion merchants have also become more flexible with their returns policies, which allows people a bigger window to try their purchases on before committing.
Still, shifting largely to e-commerce when you previously sold primarily in-store brings new fraud-prevention challenges. Merchants have to be able to look at tricky transactions and make quick decisions about their legitimacy. Here, the fashion industry can learn from digital goods merchants like gift cards and ticketing. These merchants have always had to fulfill orders within seconds of a consumer clicking checkout, and their fraud management systems need to work with as many data points as possible and make instant decisions. By looking at historical transactions and using the vast amounts of data available, they make instant, accurate decisions and keep their customers happy. Fashion can do the same to streamline their operations and better serve their e-commerce customers.
How would you describe yourself as a consumer?
I’m a pretty typical city-dwelling consumer. I’ve always liked shopping online—that’s where I buy a good chunk of my apparel, home goods and electronics. Before the pandemic, I also did a lot of ordering online and picking things up in the stores near our office.
As a consumer, what does it take to win your loyalty?
When I first moved to New York, several of my purchases were declined because I was using an Israeli credit card and shipping it to a New York address, so I know firsthand what it’s like to be a consumer whose purchase was thwarted by an outdated fraud management system. I also understand how tricky it is for merchants to balance security with an efficient, frictionless shopping experience. So e-commerce merchants that can deliver both have my loyalty.
What’s your typical uniform?
Riskified has a casual dress code. I’m not too bothered about making a fashion statement, so whatever is functional and appropriate works for me. You can never go wrong with jeans, T-shirt and a good pair of sneakers.
What’s the best decision your company has made in the last year?
We completed our Series E funding last November with a valuation in excess of $1 billion. It was a huge moment and a testament to the results we deliver for our merchants. It was extremely rewarding to get that recognition, and the funds put us in a very strong position.
It also turned out to be amazing timing, given the pandemic. There’s so much uncertainty in the world now, but we’ve been able to continue on our path. We’re still focusing on growth. We’re aggressively hiring. And we’ve been able to deliver the same level of service to our clients, even as the entire team works from home. Completing that round was a good decision at the time, and it’s become an even better decision in hindsight.
How would you describe your corporate culture?
Riskified was founded on the belief that there was a better way to manage fraud, so we value challenging convention, questioning assumptions and embracing new ideas. Employees are trusted to do the right thing and given the freedom to act.
At the same time, we know that this kind of autonomy is only sustainable if we’re honest about our shortcomings and hold ourselves to the highest standards of achievement. As a result, we have a very collaborative and inquisitive culture, with everyone working towards delivering the best service for our clients.
What can companies learn from COVID-19?
It’s important to be flexible, adaptable and cognizant to how customer demands change. One thing we saw was that consumer buying patterns started to change dramatically in ways that mimicked fraudster behavior. For example, electronics and home goods merchants saw a surge in first-time customers who were checking out high-value carts and choosing expedited shipping.
In pre-pandemic times, that would be a fairly risky transaction; fraudsters buy expensive goods to resell and they don’t mind springing more money for expedited shipping because they’re not using their own credit cards. But when cities started to go into lockdown, these transactions were also placed by people rushing to set up home offices in a short amount of time. If merchants didn’t adapt their fraud detection systems to take that change into account, they ran the risk of declining legitimate customers.
What keeps you up at night?
In the seven years that Riskified has been around, we’ve seen fraudsters get more creative as they continually try to stay one step ahead of retailers. We’ve seen fraud rings posing as computer service crews remotely access computers from senior citizens and placing fraudulent orders. We’ve seen fraudsters use sophisticated technology such as credential-stuffing tools and bots to scale up their attacks. In addition, Covid-19-related scams have led to a proliferation of stolen personal data on the dark web. Fraudsters can purchase these details for next to nothing, making the barrier to entry for a wannabe fraudster very low, and putting merchants at higher risk. Thinking about how Riskified can manage those evolving threats to keep merchants safe and legitimate customers happy keeps me up at night.
What makes you most optimistic?
It’s heartening to see how resilient some merchants have been in dealing with the pandemic, from expanding their e-commerce operations to transitioning their physical stores for curbside pick-up. Merchants worked really hard to be flexible and consistently support their customers during a really turbulent time. Almost overnight, the pandemic turned what was considered innovative in e-commerce—like mastering the mobile shopping experience—into table stakes for doing business, and merchants really rose to that challenge. Seeing how hard merchants work motivates us to deliver the best service possible for them.
Tell us about your company’s latest product introduction:
We recently launched our Account Protection offering that helps keep customer accounts safe. Fraudsters frequently try to access customer accounts to commit fraud, often taking advantage of a stored payment method or redeeming loyalty points. While these attacks are a huge concern, we’ve found that many merchants don’t have adequate security measures to handle them.
Using the power of machine learning, we analyze hundreds of data points across billions of shopping activities to recognize and distinguish legitimate actions from fraud. We use this core technology to review those login attempts and block fraud while allowing legitimate customers easy access.