Drone Nerds, the largest distributor of drones in the U.S., had a problem.
Their ecommerce site was getting an influx of fraudulent orders. The fraudulent orders, for the most part, looked normal. The orders had matching shipping and billing addresses. The buyer information appeared accurate. And yet, when Drone Nerds fulfilled the orders, end customers reported they’d never received the products — or that they’d never ordered them to begin with.
Drone Nerds was rejecting 1 in 4 incoming orders. And even from the orders they ultimately approved, they were receiving fraudulent chargebacks totaling thousands each month.
What was going on? And how could Drone Nerds overcome the financial burden of the chargebacks that resulted?
A Costly Problem: How Reshipping Fraud Works
Fraudsters were targeting the Drone Nerds site with a tactic known as reshipping fraud. The information in the fraudulent orders looked legitimate, but those orders were actually being placed by fraud rings who had access to hacked FedEx shipping accounts.
The clue? After Drone Nerds shipped out the orders, scammers were logging into the associated FedEx accounts and requesting a change in the shipping destination, often to destinations overseas. So, while the orders were placed with apparently matching shipping addresses and payment credentials, the drones were ultimately getting delivered to fraud rings overseas, where they could be resold on secondary markets.
Reshipping fraud has become a key component of nationwide scams and illegal businesses who hijack shipping accounts through FedEx or UPS for free and undetectable ways to ship. Ecommerce sites selling expensive goods, like the high-quality drones available at Drone Nerds, are frequent targets.
For Drone Nerds, this fraudulent activity meant their number of chargebacks went through the roof. Fraudsters that successfully scammed Drone Nerds shared their success with online fraud rings, and there was a huge surge in fake orders coming in.
The fraud activity also brought a number of other problems to Drone Nerds. The team was weighed down by having to manually review incoming orders, and the team was more focused on preventing chargebacks than growing their business. They were also losing sales from good customers that were erroneously declined and who were getting a poor purchasing experience. Drone Nerds knew they needed a better way to protect themselves from fraud.
Using Behavioral Signals to Detect Fraud
Before Bolt, Drone Nerds was spending hours and hours fighting chargebacks and reviewing orders for fraud. They were sick of losing sales and wasting time and money on solutions that weren’t working.
Once Drone Nerds partnered with Bolt, the teams worked together to eliminate fraud while also increasing the conversion and approval rate for good customers. Bolt was able to make in-roads on Drone Nerds’s fraud problem because Bolt evaluates not only the data a customer enters, but also how that data is entered.
Fraud rings often farm out data entry for scams. As a result, many of the fraudulent orders placed have more frequent typos and spelling corrections, or have credit card numbers copied-and-pasted into the checkout form.
By tracking behavioral signals at checkout, Bolt supplemented order information with analyses of typing speed, spelling mistakes, and clipboard activity. Bolt’s precision fraud engine was able to detect the patterns associated with scammers, and Bolt’s team of risk experts manually reviewed every flagged order before declining them.
As a result, Bolt was able to target truly fraudulent orders while minimizing the number of good customers declined by Drone Nerds. After all, Bolt knows that while fraud costs companies about $8 billion in the U.S., false positives (when good customers are denied) cost businesses five times more, for a total of $40 billion.
Now, Drone Nerds has complete fraud protection and fewer false declines. Bolt tailored solutions to fit the specific issues Drone Nerds was facing and offered a set of “best practices” for reducing both fraudulent activity and the false positives that result in lost sales moving forward. As opposed to being overwhelmed with lost sales, goods and money, Drone Nerds can now focus on their business, and trust Bolt for complete fraud protection.
The Sky’s the Limit for Drone Nerds
Bolt is proud to partner with a pioneering company in the fast-growing drone industry.
As the largest distributor of drones in the U.S., Drone Nerds pride themselves on delivering high-quality drones with high-quality service. Whether you’re looking for a drone for aerial photography, videography, surveying, or anything else, they have a model for you in their massive inventory—or you can have one custom-designed by one of their engineers.