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Leading video streaming platform

In 2016, one of the leading international video streaming platforms was searching for a truly effective solution that would simultaneously slash chargebacks, eliminate false positives, and halt affiliate fraud. The company reached out to Nethone and the results have exceeded all expectations.

Overview

The digital goods industry is growing rapidly. However, the blend of technology, apparent anonymity and big money dispersed among numerous low-value transactions lures cybercriminals like nothing else.

With instant fulfilment, purchasers from all over the world, and online ads being the key customer acquisition tool, digital goods merchants are constantly exposed to diverse threats - ranging from primitive money extortion attempts to truly sophisticated affiliate fraud. The featured client, just like many other companies offering online VOD services, had been experiencing serious problems with both - payment and affiliate fraud. There is a mutual influence between the two. Criminals specialized in ad fraud oftentimes not only provide merchants with fake traffic - be it generated by botnet or hired humans - but also use stolen card details to set up fictional user accounts or make low-value purchases meant to prove their credibility. In effect, the merchant falls victim to two fraudulent acts: firstly, when paying for conversions that have never taken place, secondly, when covering the chargeback expenses. While selling their merchandise to diversified groups of customers and having to assess the risk carried by each transaction in a split second, the featured client needed a truly accurate way to simultaneously automatically protect their bottom line, and to avoid false positives - the erroneous fraud detections that hamper sales. The fraud solution the company had been using before, could not cope with that task. The client needed a comprehensive, robust system that would monitor and evaluate the quality of incoming traffic in real time and faultlessly discern legitimate users from fraudsters or bots. Thanks to Nethone, the company has managed to effectively detect fraudulent traffic and reduced the chargeback rate dramatically.

Challenges

Very high chargeback rate

Prior to implementing Nethone, the client had been facing a dangerously high chargeback rate - close to the limits imposed by card schemes. The goal was to reduce the number of chargebacks to a safe level and keep it at bay for good.

Affiliate fraud

The client had been continuously losing money on fraudulent traffic they were buying within various affiliate programmes. In many cases, banner hits, entries and even conversions were performed by fraudster bots instead of real users. The goal for Nethone was to accurately detect and block fraudulent traffic in real time to keep the client’s affiliate network clean and profitable.

Very high number of false positives

False positives, known also as erroneous detections, had been hampering the merchant’s sales for a long time. The fraud solution the company had been using before integrating with Nethone happened to be insufficient for the requirements of the digital goods business - frequently identifying legitimate users as fraudsters. The goal was to unlock sales through more accurate, automated transaction legitimacy assessments, regardless of the diversity of customers and complexity of the market.

Payment friction

Accepting payments from numerous customers willing to carry out their transactions and receive the ordered service in a blink of an eye, requires real-time processing. Prior to implementing Nethone, the merchant had been facing noticeable payment friction caused by the outdated FDP solution, too slow for the job. Payment friction had been hampering sales and the task for Nethone was to eliminate the operational slow-down and make fraud prevention a 100% in-the-background process.

Solution

Custom Machine Learning models designed to automatically detect fraud attempts in real time.

Nethone’s team created custom models to analyse historical and live customer data flowing through the client’s system. The models helped to discover links and interdependencies between numerous apparently unrelated factors, and “learned” to predict future fraud attempts.

A dedicated profiler designed to detect fraudulent traffic.

Nethone provided the client with a state-of-the-art profiling tool capable of investigating each single individual visiting the video streaming platform and effectively detecting the traffic generated by bots.

Results

Thanks to Nethone, the merchant managed to eliminate a great part of fraudulent traffic, reduced the manual review rate by half and the chargeback rate by 40%. With the new fraud solution on board, the company could finally sell more and enhance the cost effectiveness of its affiliate marketing. Thanks to the superb accuracy of the AI-driven system, false positives have been turned from a serious pain point into a hardly noticeable hitch.

Denial rate

-50%

Chargeback rate

-40%

Savings in affiliate marketing

23%

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