Recessions happen and are a normal part of conducting business. Amidst layoffs and the tightening of budgets, it can be difficult to know whether you’re spending too much or too little time and money on deterring bad actors and fraudsters from targeting your business. Cut too many deterrence measures and you and your customers will be left vulnerable. But if you inundate potential customers with too many steps during onboarding you could turn them away– making the economic impact of a recession even worse.
Here are three areas you should focus on to recession-proof your fraud deterrence, keeping your business protected without turning away legitimate users:
Focus on your long-term fraud deterrence goals
Recessions force businesses to look away from the long-term and focus on the short-term– mainly, how you will survive the next few months (or years) until the recession passes. When you’re tightening your budgets and looking at operating on a skeleton crew, it can be difficult to see the value in looking long-term. But long-term planning is a key way to keep your fraud deterrence successful and to ensure that you’re not spending needlessly even when the economy is good.
Focus on the following:
- What types of fraud impact your business the most? Are you a scooter rental company that’s most concerned about preventing riders under the age of 18 from renting, or are you in fintech and are concerned about scammers gaining access to your platform?
- In the next five years, are you looking to expand internationally or domestically?
- What do you want your customer onboarding experience to look like?
These key focus areas will help you look beyond your budget and create a plan that enables you to find the fraud deterrence solutions that won’t just satisfy your present-day needs, but will also scale with you. It doesn’t matter if the identity verification solution you purchase is the cheapest in verifying IDs in the USA, for example, if your five-year plan involves expanding internationally– leaving you in a situation where you’ll have to find a new identity verification solution while simultaneously trying to grow abroad.
Another key aspect of your long-term growth is picturing your ideal customer experience. After all, your fraud deterrence strategies will often directly impact customers during one of the most critical sale points: onboarding.
In our own experience, we’ve seen customers not use a product because the identity verification process during onboarding was so clunky and difficult to use. This is especially important to keep an eye on during a recession, where every customer counts more than ever.
Include in your long-term goals the key information you’d need to verify someone’s identity in order for them to use your product, along with the best-case and worst-case identity verification process. Keeping this in mind will help you make fraud deterrence decisions that center the customer instead of your business. And centering the customer can be a key part of creating a top customer experience, helping you win users from your competition.
Define what a successful fraud deterrence program means to your business
Focusing on your long-term fraud deterrence goals and making sure they tie into your business goals will get you on the right track in choosing solutions that work for your business. But it’s even more important to define what a successful fraud deterrence strategy means and looks like.
It’s easy to say that a successful fraud deterrence plan means no fraudsters on your platform, but you’ll need to dig deeper. It’s simply impossible to prevent any fraud from occurring on your platform, so you’ll need to ask yourself this key question:
- What amount of fraud am I okay with occurring on my platform?
This is a key facet of risk tolerance, which every business should be thinking of. Essentially, how much risk are you willing to take on? What’s the largest amount of profit you’re able to lose? What’s the largest amount of risk to your reputation your business will be able to handle?
In general, risk tolerance is a key part of recession planning– and it needs to be a key part of your recession-proof fraud deterrence strategy as well.
When you apply this thinking to your fraud deterrence measures, apply the thinking you’ve already done with your long-term goals: what fraud affects your business the most and what fraud are you willing to not focus as much on because it doesn’t have as large of an impact? This will help you determine what “success” looks like when it comes to your business. And it will look different across industries.
For example, age-restricted goods businesses would consider it non-negotiable to even think about letting individuals under 18 or 21– depending on the substance– onto their platform. Therefore, they typically invest a lot into identity verification software solutions to ensure that no underage users are on their platforms.
What are the “non-negotiable” fraudulent activities in your industry?
Build fraud deterrence into your customer acquisition strategy
A recession is typically all about strengthening your existing relationships and acquiring new customers for the least amount of money. When you’re reaching out to closed-lost opportunities, make fraud deterrence a key part of your win-back strategy.
Many industries– like alcohol delivery and e-bike/scooter rentals– have become pretty saturated in recent years, giving prospective customers a lot of options. We’ve found that when the offering is similar, customers will turn to how the business verifies their identity as a key way to choose the best solution for them.
Businesses that have a streamlined approach to identity verification– and, in turn, fraud deterrence– have an edge over businesses that don’t.
While you’ll certainly want to cut your spending during a recession, fraud deterrence isn’t something you can necessarily stop doing– unless you want to be targeted by fraudsters. It also doesn’t mean that you have to spend a lot of money to deter fraud– and take on a lot of risk when you can’t spend as much. Focus on the above key areas and build a fraud deterrence strategy that works for you, both during a recession and after.