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Trust & Safety for On-Demand Businesses

TRUST & SAFETY FOR ON-DEMAND BUSINESSES

© Sift Science. All rights reserved.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

The problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

On demand services and risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

What’s the answer? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Choosing a fraud solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12


Page 1 of 12 © Sift Science. All rights reserved.

IntroductionJen is a customer service guru and an amateur mixologist – which was why she was

super excited to join Cheers to You as a customer service rep. Cheers to You is an up-

and-coming on-demand business that connects partygoers with the best bartenders

in their area. Both customers and investors have really latched onto the idea.

And it’s easy to see why. When a customer uses Cheers to You, they’re not just booking

a top-notch bartender. Cheers to You also stocks the host’s bar and takes care of the

much-dreaded cleanup. All the partier has to do is find someone willing to be their

designated driver. It’s the hottest new on-demand service to hit San Francisco.

The problemUntil now, Cheers to You had been doing really well: scaling like crazy, opening a

new office in New York City, attracting new customers and celebrity endorsements.

But Jen has a problem. In addition to typical customer inquiries like ‘how do I

reset my password,’ Jen has been getting fraud reports. Lots of fraud reports.

Since the company started to scale, Jen

has been inundated with chargebacks

and reports of fake accounts. Customers

are reporting bartenders who’ve tried to

get them to pay off-platform, or who aren’t

showing up for jobs. Scammers have begun

using Cheers to You for phishing attacks or

to spam unsuspecting users. Jen barely has time to keep up with customer service

tickets anymore. The more the company grows, the worse their fraud problem gets.

It isn’t as simple as hiring a fraud team. The company is still too small to make it work.

They’re keeping their team lean and nimble as they scale. So, it falls on Jen to deal

“It isn’t as simple as hiring a fraud team”

“Awesome service”



with the complaints and chargebacks as they come in – and since Cheers to

You is an on-demand service, the fraud reports come in very, very quickly.

To make matters worse? Customers are starting to talk. People

who’d used the service before – even customers who’d enjoyed

it – are telling their friends that Cheers to You is unreliable.

For a company like Cheers to You, trust is essential. Party hosts are already

stressed out about logistics; the last thing they want is to worry that their bartender

might not show up on time (or at all). By using Cheers to You, customers are

entering into an intimate contract with the business. They’re trusting the service

to provide them a frictionless, safe experience. If people don’t feel like they can

trust Cheers to You, then the company is doomed. Given her background, Jen is

well aware of the importance of trust. That’s why she’s starting to get nervous.

On-demand services and riskTo get a handle on Cheers to You’s fraud problem, Jen needs to take a step back

and understand where the fraud is coming from. Like all on-demand services,

Cheers to You has been successful because it delivers services in real time. It

fulfills customers’ needs at the speed of want. That’s why customers and investors

were so attracted to Cheers to You in the first place. As an on-demand service, it

has grown at the same rate as customers’ desire for quick, reliable bartenders.

But as Jen has quickly discovered, these advantages are counterbalanced

by unique challenges. With each real-time transaction, an on-demand

business invites immediate risk. Cheers to You’s selling point is that

it allows party hosts to book a bartender for a party that’s happening

tomorrow, or this afternoon. But because every transaction is immediate,

Jen has no window of time in which to detect and block fraudsters.



Although Jen doesn’t have an engineering background, she’s explored

options like multi-factor authentication or email verification. But putting

up these barriers between a customer and their ability to instantly

book a bartender isn’t really an option. Such barriers would create

undesirable friction that would undermine the user’s experience.

As Jen starts to think more about her fraud problem, she jots down a list of challenges that Cheers to You faces as the company grows...

1. Balancing fraud detection and user experience

Fraudsters love on-demand services like Cheers to You because they can do a

lot of damage in little time. Jen and the other customer service reps can’t review

customer orders before they go through, because that would create friction for

users. Fraudsters take advantage of the service’s immediacy to wreak havoc.

2. One business, multitudes of fraud

There are no limits to the types of fraud one business can face. As an

on-demand company, Cheers to You is regularly confronted with promo

abuse, account takeover (ATO), chargebacks, and much more.

“With each real-time transaction, an on-demand business invites immediate risk”



Chargebacks

Chargebacks are an especially pesky problem for Jen and her fellow

on-demand fraud fighters. Fraudsters often test stolen credit cards

on on-demand services, which may prompt the card owner to issue

a chargeback. Cheers to You has been losing a lot of money to

questionable chargebacks.

Account abuse

A few fraudsters have set up fake bartender accounts to convince

customers to send them money, only to disappear from the platform

after scoring their cash. In some cases, bartenders will lure customers

off-platform to demand additional payment, or refuse to clean up after

their bartending service unless the customer pays extra. Whenever

account fraud happens on the platform, Cheers to You loses money:

in the short term, the grumpy customer may demand their money

back for the service; in the long term, the customer may swear off

Cheers to You entirely and tell their friends to do the same.

Types of Fraud

Promo abuse

Since Cheers to You is still a young company, it relies on promotions

to attract new customers. But Jen has noticed an alarming trend.

Customers have started using different emails to take advantage of a

promotion multiple times. Cheers to You has already lost a great deal

of money to promo abuse.

Account takeover

Many Cheers to You customers store their payment information

so they can book a bartender quickly. However, Jen has been

hearing from customers whose accounts have been compromised.

Fraudsters steal account information and use the customer’s

stored payment methods to make fraudulent purchases. When that

happens, the customer always blames Cheers to You, even if there

was nothing Jen could have done to stop the scammer.202

202 202

202



3. Keeping fraud-fighting costs low

Jen has seen firsthand that Cheers to You isn’t a cheap operation to run. In

addition to paying its employees, the business also has to pay the bartenders,

cover the cost of drinks and equipment, pay the cleaners, ensure that the cleaners

are properly supplied, and so on. It adds up! That’s why Cheers to You can’t

afford a full-fledged Trust & Safety team. It has to grow quickly to turn a profit,

which means keeping teams lean and fraud-fighting costs low. Jen is using time

that would be better spent on customer service to deal with chargebacks or to

track down fake accounts. That’s not good for business (or Jen’s sanity!).

4. Building a foundation of trust with customers

Here’s the most important part. As the business grows, Jen is realizing that

operation costs aren’t just paid in cash: trust is an equally important currency. If

people don’t trust Cheers to You to provide fast, reliable service, they won’t use

the platform, and they won’t recommend it to their friends. It’s that simple. If Cheers

to You can’t attain and maintain customers’ trust, the business has no future.

“Jen is realizing that operation costs aren’t just paid in cash: trust is an equally important currency”



What’s the answer?Glancing over her notes, Jen comes to a sobering conclusion: The stakes are high!

If she doesn’t do something about the company’s fraud problem now, Cheers to

You will find itself drowning in fraud. A company that relies on customers’ trust –

especially such a young company – can’t survive underwater for too long. Once

customers start to leave, investors will leave too. Potential customers will turn to

competitors. The business will have to pivot, but since they’re already strapped

for cash, that might be impossible. If Jen doesn’t do something about her fraud

problem, it’ll be downright apocalyptical for the once up-and-coming company.

And the stakes about to get even higher. There’s been talk around

the office of expanding from San Francisco and New York to Austin,

Boston, and Los Angeles. Three new locations! Jen breaks out in a

cold sweat just thinking about what that’ll do to their fraud.

As far as Jen can see, there are two options. For one, Jen can run screaming to the

hills… But she doesn’t want to let her buddies on the customer service team down.

The other option is to find a fraud solution. Jen can’t do mortal

combat against the fraudsters herself. She needs a solution that can

fight real-time fraud and abuse, and that can do so at a low cost.

Choosing a fraud solutionChoosing a fraud solution is easier said than done. The options

are numerous; the buzzwords are dizzying. Jen spends

hours vetting possible solutions, and all she gets is a headache. Rules-based

systems? Machine learning? What’s the difference? Why does it matter?

After a long, frustrating day, Jen finds herself at the Sift Science website. She does

some investigating, mapping her list of challenges to the Sift Science solution.

“A company that relies on customers’ trust... can’t survive underwater for too long”



Here’s how Sift Science empowers on-demand businesses like Cheers to You to fight fraud at scale...

1. Balancing fraud detection and user experience

Sift Science’s real-time machine learning and automation suite make it the

ideal fraud solution for on-demand businesses. It provides a Trust Platform that

allows on-demand businesses to stop fraud immediately, introduce frictionless

experiences to improve conversion, and give customers ample reasons to keep

coming back. Rules-based systems, by contrast, are too slow and lumbering for an

on-demand business. These systems sometimes take days or weeks to update,

while fraudsters are operating in minutes or seconds. Rules-based systems

make fraudsters’ lives easier. Machine learning systems make your life easier.

2. One business, multitudes of fraud

The Sift Science Trust Platform offers a wealth of innovative fraud

prevention solutions, all on a single platform. Instead of using multiple

platforms for various types of fraud, on-demand businesses like Cheers

to You can use Sift Science as their one-stop shop to fight promo

abuse, stop account takeover, prevent chargebacks, and more.

“The Sift Science Trust Platform offers a wealth of innovative

fraud prevention solutions, all on a single platform”



Promo abuse

Sift Science uses a machine learning model that’s uniquely

tailored to stopping promo abuse. The model specializes

in detecting users who are attempting to abuse promo,

referral, and coupon programs, on their computers or on

mobile. Drawing on a global network of online businesses

that anonymously share promo abuse data, the Sift Science

platform generates a massive database of fraud patterns. The

system uses this data – from folks like DoorDash, HotelTonight,

Chownow, and Cabify – to learn and improve in real time.

Each time a fraudster tries to scam someone, whether

they’re doing their dastardly deeds on Cheers to You or

on a different Sift Science customer’s platform, Sift Science

only gets better. And the system is smart enough to detect

patterns that are unique to on-demand businesses. It’ll learn

what kinds of fraudsters are typically attracted to Cheers

to You and then keep an eye out for them in the future.

Account takeover

Account takeover (ATO) attacks have recently seen a dramatic spike that demands a new

fraud solution. Massive data breaches and phishing attacks can give criminals access to

millions of credentials, which they can then test on sites and apps until they find a match.

On-demand businesses like Cheers to You are particularly susceptible, since fraudsters

can quickly test stolen credentials before the business or the account’s rightful owner

learns anything is amiss. But the Sift Science Trust Platform stops ATO in its tracks.

202

202



Chargebacks

On-demand platforms like Cheers to You, which facilitate instantaneous transactions,

are often hit with chargebacks and other friendly fraud. Sift Science hosts a machine

learning model specifically geared toward payment fraud. In a world where fraudsters

can nab your identity in under sixty seconds, it’s the only method for payment

fraud prevention that works faster than fraudsters. Each millisecond, the model

analyzes billions of global payment fraud patterns across desktop and mobile,

drawing on data from the world’s largest network of e-commerce merchants.

Account abuse

Sift Science takes in a user’s behavioral data to create a unique profile for that user,

which is then used to flag suspicious behavior. The Cheers to You fraud team can then

use the investigative console to view login scores, alerts, the user’s location, their device,

and their login data. The Trust Platform lets you parse the good customers from the bad

automatically, so you don’t need to do much (or any!) manual review. And if you do want

to dig in and review transactions yourself, never fear: the Sift Science console has easy-

to-use workflow and manual review capabilities, so Jen and her fellow fraud-fighters

can streamline their process with confidence. Thanks to live machine learning, Sift

Science can resolve issues automatically before the fraud ever reaches a customer.

“In a world where fraudsters can nab your identity in under sixty seconds, it’s the

only method for payment fraud prevention that works faster than fraudsters”

202

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3. Keeping fraud-fighting costs low

As Jen quickly discovered, most fraud prevention platforms require a lot of attention:

the sort of attention she doesn’t have the time or expertise to give. Many rules-

based solutions demand a team of fraud experts to constantly monitor and update

the rules, as well as to adjudicate between honest and nefarious transactions.

Even worse, the other fraud platforms Jen was exploring each deal with one type

of fraud, so the company would have to buy a fraud solution for promo abuse, a

different one for ATO, yet a different

one for chargebacks, and so on. Like

all on-demand companies, Cheers to

You wants to stay nimble and pivot as

necessary. It doesn’t have the resources

to spare on so much overhead.

Sift Science, by contrast, is an easy one-

stop-shop for all of the company’s fraud. By working with Sift Science, Cheers to You

can fight all of its fraud with one platform. And because Sift Science is an automated

fraud solution that doesn’t require much babysitting, Cheers to You doesn’t have

to hire a large fraud team to run the operation. It can cut costs and stay lean.

“If you can’t provide your customers with a

frictionless experience...they’re not coming back”



4. Building a foundation of trust with customers

With on-demand businesses like Cheers to You, user experience is paramount.

If you can’t provide your customers with a frictionless experience from start to

finish, they’re not coming back, and they’re going to be vocal about that decision.

When people use an on-demand service, they expect instantaneous results. So,

introducing steps like multi-factor

authentication or email verification,

which slow down a customer’s

transaction, isn’t always a great

option – even if it might make your

user safe. (And even then, there’s no

guarantee.) The more barriers you put

between a customer at the checkout button, the less likely they are to check out.

And it’s not just about friction. Fake accounts can really damage your

reputation. When people use Cheers to You, they’re trusting someone

to enter their home and help make or break their party. That requires

a lot of trust. If people start hearing about people using fake bartender

accounts to scam customers, they aren’t going to trust the platform.

That’s where Sift Science comes in. Sift Science protects your reputation and

your bottom line. We let you keep fraud at bay without introducing friction for

your customers. With Sift Science, everyone wins...except the fraudsters.

“Fake accounts can really damage your reputation”



ResultsThanks to its partnership with Sift Science, Cheers to You is now enjoying unparalleled success. Like HotelTonight,

ClickMechanic, EatStreet, and other on-demand businesses that work with Sift Science, Cheers to You

keeps fraud low and feels confident in its ability to scale. Here are some

businesses getting real results with Sift Science:

Empowered by live machine learning, automation, and a platform that makes quick, informed decisions about

distinct types of fraud, Cheers to You is ready to face whatever comes its way. These days, whenever Jen

hears about a fraudster who’s been stopped dead in his tracks, she raises a glass to Sift Science.

“Our business is time-sensitive, and we needed to

find a solution that quickly and effectively helped

reduce fraud issues within our system. Fraud used

to keep me up at night – now it doesn’t.”

Sam Shank, CEO and Founder

on-demand accommodation booking site

CHARGEBACKS

reduction in

BLOCKED AUTOMATICALLY

more orders

“Using Sift Science allows us to not waste resources

on fraud. Instead, we can focus on building the best

product possible for our diners.”

Ian Lavey, Director of Operations

on-demand food ordering service

CHARGEBACKS

reduction in

RETURN ON INVESTMENT

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