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Connected device makers are under assault by fraudsters and Customer Service teams are fighting back

By Sudhir Agarwal, CEO & Founder of Everise 

Customer service agents backed by experienced anti-fraud teams are gaining the upper hand against would-be fraudsters. A relatively small team of experts at Everise spotted and blocked a single fraud ring, directly preventing almost US$10 million in losses.

Facing zero economic growth in Asia, businesses, to protect their bottom line, are examining unnecessary losses, including those due to fraud.

Fraud is of concern for most organisations. More than two-thirds of businesses in the Asia Pacific have reported increased concern for losses from fraud. In Southeast Asia, LexisNexis Risk Solutions found that the cost of fraudulent transactions to companies, including the cost to replace the product and investigate the case, was on average 3.4 times more than the original transaction value lost. Yet, many business leaders may not realise that customer support teams can help nip fraud at the bud.

Fraudsters target ill-equipped customer support teams

Scammers are incredibly adept at finding loopholes in policies and procedures. Put there by design to enhance the customer experience and meet the demand of legitimate buyers, these same policies and procedures help the bad guys steal and resell enormous amounts of product. The net effect severely damages companies and is bad news for consumers because it drives up price and slows the pace of innovation.

Connected devices are especially attractive targets for fraudsters. Connected devices tend to be trendy products and buyers worldwide are unusually motivated by the need to both acquire them and furthermore, to keep up with the regular release of new versions. This has two important implications.

First, motivated buyers are often willing to purchase such products via non-traditional channels, and second, these products usually occupy a price point that’s high enough to make the risk of fraud worthwhile, yet low enough to keep sales volumes high.

High volumes of sales help mask the actions of the fraudster, and motivate the device maker to relax certain controls on purchases so as to smoothly keep up with demand. It’s these relaxed controls that the fraudster works to exploit.

To be successful, a fraudster dishonestly interfaces with their target’s customer support agents, and each of these interactions offers small clues as to their larger modus operandi. Unfortunately, disparate small clues aren’t enough to reveal the entire scam, and the scammers know this. Someone needs to identify and assemble these scraps in a way that reveals the big picture.

The fraud occurs in one of three manners: Credit Card fraud, Warranty fraud, or Reseller fraud.

  • Credit card fraud happens when hardware purchases are made with stolen or counterfeit credit card numbers. In 2019, payment card fraud losses reached $27.85 Billion.
  • Warranty fraud occurs when a scammer orders a device and falsely reports that it arrived faulty or not at all, and then requests a replacement device or refund. The fraudster will either return something other than the device, or will not return the required product at all, selling both the original and the replacement before doing it again. In 2016, Fitbit experienced warranty fraud to the extent that hackers acquired customer data and posed as the customer to avail of the product’s warranty, raking in new, replacement devices.
  • Reseller fraud sees a scammer acquire and exploit a discount promotion, using the promo code to purchase excessive quantities of a discounted device to resell them through unauthorized channels. This damages the device maker’s relationship with their authorized vendors and often results in a poor experience for legitimate customers. In India, reseller fraud impacted 40-45 percent of online sales of smartphones, causing a decline of 21-24% of overall Smartphone sales.

But while the customer service agent’s job is to efficiently resolve product issues, they rarely compile data in hopes of unravelling a complex puzzle of fraud. Scammers know this, and exploit the fact. So how can customer service agents help?

The benefits of outsourcing fraud prevention

The key is experience. Intuition plays a vital role in fraud detection and prevention, and an experienced team takes time to congeal.

Clients of outsourced teams benefit from the time customer service agents have spent learning on other accounts, which results in a sharp drop of time to effectiveness, and a concomitant surge in fraud prevention savings.

It works: one of our teams at Everise recently made a discovery that blocked the efforts of a single fraud ring, saving the client almost US$10 million in the process.

While saving money is important, it is more effective to stave off and prevent fraudsters from reselling branded products on other platforms. That helps preserve brand reputation and to elevate a customer’s experience.

That case, and many others just like it, demonstrate how focused teams of smart people, working hand-in-glove with customer support agents, can learn a scammers’ patterns and use that knowledge to create systems to foil their scams without impeding the purchases of legitimate buyers.

Some hope to solve the fraud problem using artificial intelligence (AI). Yet AI has not yet been proven as a useful technology. While AI can look for patterns, it can quickly spot transactions that meet certain, adjustable, thresholds of suspicion and take some action accordingly.

The problem is that AI can falsely flag legitimate purchases as fraudulent, which can be as damaging to a brand as failing to stop actual scammers. Unfortunately, AI doesn’t have the degree of cultural understanding and contextual awareness that permits the same action to take on very different meanings in different circumstances. Of course, humans do have this ability, and use it to differentiate between false and true positives. Which is why experienced customer service teams become useful. Therefore, while AI is a useful tool for supplementing experienced fraud teams, it cannot be counted on to take their place.

Effective fraud detection truly is as much art as science, requiring a combination of fuzzy, experience-won intuition and an extensive base of black-and-white knowledge. Both are acquired over time. Because newly assembled fraud teams struggle to quickly reach a state of effectiveness, many device makers victimized by fraudsters either pull the plug too soon after failing to see much return on their investment, or opt against trying in the first place.

Choose a partner who will fight for you

If you choose to work with a Business Process Outsourcing (BPO) partner, exposure to fraud should be a consideration in selecting your partner. Find one that evidently works hard to keep its best agents. We call them champions of customer experience, because they understand the customer journey, know your product, and most importantly, will fight for your brand.

As importantly, your customer support teams should integrate well with high-performing, experienced fraud detection and prevention teams, able to quickly achieve high levels of productivity. Team cohesion translates to extensive savings, lower prices and unhindered innovation.

As customer support agents bridge your brand to your customers, they are your first line of defence against unsavoury agents looking to make a quick buck. A savvy customer service partner helps protect the brand by delivering exceptional experiences, preventing losses where they are commonly overlooked.


Notes to editors:

  1. Supplementary video: 5 Secrets to Fighting eCommerce Fraud
  2. Biography: Sudhir Agarwal

About Everise

Everise is a global experience brand extending CX transformation to enterprises from the Fortune 500 to the world’s most beloved unicorns to high growth tech startups. With 15 experience centers located strategically across seven global markets, Everise leverages the unique strengths of specific geographies and populations to provide partners with outsourced CX that is affordable, sustainable, agile, capable and fluent in over 20 languages. Learn more at

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  • ecommerce
  • bpo
  • fraud prevention
  • customer service
  • fraud
  • customer experience
  • credit card fraud
  • customer support
  • ai
  • everise
  • next gen bpo
  • reseller fraud
  • warranty fraud


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