Trust and Safety

The internet used to be sort of an untamed frontier, and that was part of its appeal—there were few rules and you never knew what you might encounter. That’s a good way to explore the potential of new technology, but it’s not a great environment to do business in.

These days, controlling online fraud and abuse is a major concern, and a business philosophy known as “Trust and Safety” is emerging as a way to confront these challenges in a more effective way. What does the concept of Trust and Safety really mean, and should merchants start adopting it?

For all the good it has brought to the world, the internet has also facilitated a lot of bad behavior, much of it criminal in nature.

For merchants, e-commerce literally opens up an entire world of possibilities, but with it comes the ever-present threat of online fraud.

It has proven impossible so far to create functional online payment systems that are one hundred percent safe from fraud, and nearly every instance of fraud results in a costly and harmful chargeback for the merchant who processed it.

With every chargeback comes a significant loss of revenue and one step closer to that “excessive chargebacks” threshold where their merchant account may be jeopardized. Fighting fraud and chargebacks effectively isn’t a matter of swatting down incidents as they occur—it requires a comprehensive strategy based on solid data analytics, industry knowledge, and experience.

Merchants know this, and yet online payment fraud continues to grow at an alarming pace—it was up more than 14% in 2021. New ways of thinking are needed to bring fraud and related problems under control, and the ideas and practices wrapped up in the Trust and Safety banner could help to provide a better framework for building a more secure internet.

What Is Trust and Safety?

At this point, Trust and Safety is not a rigidly defined concept, although it does already have a professional organization. It began to emerge when e-commerce companies started expanding into services that would involve providers and experiences not entirely under their control.

This includes companies like Airbnb and Uber, where there is potential for real physical danger, but also platforms where virtual threats like harassment, misinformation, and fraud can occur.

Knowing that their customers could face real danger from bad actors operating under their platform, some of these companies started creating Trust and Safety departments to manage risk reduction practices and minimize any harm that might occur to their customers.

As the name implies, the purpose of a Trust and Safety unit is to build the customer’s trust in the platform and keep them safe while they are using it. As fraud is one of the most common ways people experience direct harm online, it makes sense that many organizations are including fraud prevention under the auspices of Trust and Safety.

In other words, Trust and Safety is about protecting an organization’s revenue and reputation by protecting its customers. Fraud prevention can be a part of this, but it isn’t exactly the same thing.

Why Is Trust and Safety Important for Merchants and their Customers?

Trust and Safety defines practices that are important for merchants who offer customer experiences that can drift beyond their control. If you aren’t facilitating in-person meet-ups, providing messaging services, or hosting discussion forums, you might not think this applies to you, but consider carefully.

Merchants who allow product reviews on their site are creating a space in which unethical users can post harmful or deceptive content. The proper Trust and Safety approach would involve creating appropriate content guidelines and enforcing them.

Trust and Safety can also create policies and procedures for dealing with abuse that happens offsite, like social media misinformation or fake websites that imitate your brand. However, it is true that for many merchants, fraud prevention will be the aspect of Trust and Safety that is most relevant to them and their customers.

How Can Merchants Improve Their Trust and Safety Practices?

When it comes to building trust with customers, it’s not just about showing them that you’re watching out for cybercriminals. In fact, too much security theater can have negative consequences, making good customers feel like they’re being treated with suspicion, leading to friction, bad experiences, and lost loyalty. At the same time you’re putting up obstacles for fraudsters, you want to be removing them for verified customers.

One example of where this can play out is in two-factor authentication. This is a great way to stop fraudsters, but it definitely adds an extra step (and some friction) to the checkout experience.

A good compromise is to use an anti-fraud tool that reviews transaction data to identify trusted users, who can be allowed to skip the two-factor authentication.

Trust and Safety can also play a role in chargeback management. When chargebacks arise from negative customer experiences, Trust and Safety teams can analyze the situation to determine where relations with the customer broke down and how customer service policies could be improved. Trust and Safety can also deal with blocking customers who engage in friendly fraud or abuse your return policies.

Conclusion

For merchants who provide social platforms, gig economy services, and other functions that carry higher degrees of risk to the customer, it is essential to follow best Trust and Safety practices.

Trust and Safety is a concern for all merchants, even if only in the limited scope of fraud prevention, but the extent to which it needs to be developed as a broader practice depends on the activities you are actually involved in. Just be thorough in assessing all of the ways in which you might be exposing your customers to risk.

It’s also worth keeping in mind that the bad experiences Trust and Safety is supposed to prevent frequently overlap with the scenarios that lead to chargebacks.

If you have a Trust and Safety department, chargeback prevention should be integrated with it, or at least work in close communication. That will ensure that you aren’t maintaining separate silos of information and procedures that could be working together toward the same shared goal.

Thanks for following the Chargeback Gurus blog. Feel free to submit topic suggestions, questions, or requests for advice to: win@chargebackgurus.com