Policy Abuse
February 7, 2024

How Merchants Address Policy Abuse

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Knowledge of Policy Abuse Across Organizations is key

When everyone in an organization is aligned toward the same goal it become more possible to fight policy abuse. A company-wide, holistic approach to maintaining policy helps uphold policies that prevent abuse. Even departments like marketing have a part in upholding procedures that prevent abuses of company policy.

"...If every employee in every department knows a merchant’s policies, people determined to commit fraud will have a harder time. A company-wide strategy of policy awareness means that everyone in a company is ready to report suspicious behavior when they see it."- Justin Hype
A strong culture of understanding company policy also gives your company a good shot at maintaining a consistent set of practices related to policies.

Knowledge of Policy Abuse Across Organizations

A lot of organizations have a company-wide practice of ensuring their people have an awareness of company policies. Interdepartmental cooperation makes it easier to defend against policy abusers.
Not every company maintains this practice, though. A lot of companies treat policy abuse as important to only a few departments. When the fact of the matter is policy abuse effects an entire company, and policy abusers may approach a company through any department.
Every company needs to adopt a more holistic culture of preventing policy abuse, which means a coordinated effort across all departments.

Automation and Identity for Policy Protection

When incorporated into a well-designed strategy of prevention, automation can empower merchants. Automated systems can identify abuse and gather data faster than a team without automation, and empower them to act fast.
In spite of the potential upsides, many merchants have never considered heavily incorporating automation into their policy abuse prevention practices. They face a variety of challenges, including communication problems between departments, who would benefit from more automation in their communication tools.
Automation can help. You just have to use it well.

Use of Automation to Detect Fraud and Policy Abuse

Here’s a hypothetical example. A fairly large business, a retailer maybe with a team ranging from eight to twenty people, depending on the season, has been reviewing suspicious claims manually. About a quarter of their claims seem suspicious, based on INR history. They end up rejecting less than one percent of overall claims in this way.
That’s not a promising set of statistics. With a more strategic use of automation and a more rigorous analysis system, it should be possible to bring the number of rejections closer to ten percent. That could save merchants millions of dollars in revenue every year.
Merchants who see a rise in policy abuse every year are the same merchants dissatisfied with their data collection. A lot of merchants want more accuracy and better automation in their data collection methods, and they want higher levels of intelligence in their data organization.
A shortage of good automation in the return process already causes headaches for merchants. Efficiency takes a hit during seasons of high return volume, like high shopping seasons. A merchant’s resources get absorbed by high volumes of returns, which means they have fewer resources for dealing with policy abusers.
A lot of merchants still use a manual review process to deal with their policy abusers.

Manual Review of Refund and Return Claims

Manually reviewing claims from customers can be time consuming. Sometimes it can take days. Time means attention from employees, which means spending money. Sometimes, the refund process turns out to be more expensive to merchants than it would be if customers broke into their facilities and stole the merchandise.
Restocking returned items can be pretty grim, because a lot of items don’t get back to a merchant entirely unscathed by their adventures. Merchants might be able to restock less than half of returned items. That just becomes lost revenue.

Value Recouped From Returns

If only about half of returns can be restocked, then merchants will always have a problem recouping those losses. Not only that, but when it comes to it, merchants often can’t recoup more than half the value of their merchandise.
Between that and the costs of the return process overall, and the rates of policy abuse and fraud that tend to happen in the same process, and you can see how much pressure there is on merchants to improve their strategies around policy abuse and refunds.