QUASH: How we crushed online credit card fraud

How a single algorithm blocked credit card fraud on eBooks.com

Online credit card fraud algorithm
eBooks'com's fraud-busting system is a well-oiled machine
  • The global cost of online credit card fraud exceeds $8 billion annually.
  • But that is dwarfed by the effects of over-cautious screening: $118 billion in lost sales.
  • eBooks.com’s credit card fraud-screening algorithm QUASH is 5 times more accurate than industry average.
  • The system discriminates effectively between transactions that just look dodgy and actual fraud attempts.

Online credit card fraud is a major issue for online retailers, especially for those selling intangible goods like ebooks. With physical goods there is at least a delivery address, which can make law enforcement possible. Ebooks are more problematic.

Online retailers without adequate protection have little choice but to decline all transactions that look slightly odd, resulting in lost sales due to false positives. Some companies block sales to entire countries, or even entire regions, because the challenge of detecting fraud is too much.

The tools available from payment gateways and third party providers are hopelessly inadequate, blunt instruments. So we created a proprietary fraud screening system, QUASH, that is extraordinarily effective at minimising credit card fraud and charge-backs. Our charge-back rate is a fifth of the industry average for online content sales.

eBooks.com's proprietary QUASH algorithm crushes online credit card fraud
eBooks.com’s proprietary QUASH algorithm crushes online credit card fraud

But more importantly, the rate of “false declines” – innocent people being blocked – is close to zero.

[2019 update: as QUASH keeps running it gets more effective. Our fraud rate for 2019 is down to 0.05%.]

QUASH checks every new transaction against millions of data points, and identifies anomalies and evil-doers in less than a second. The algorithm runs quietly in the background, and requires minimal human intervention.

The first prototype of QUASH, eBooks.com's fraud Screening system
The earliest prototype of QUASH, eBooks.com’s fraud Screening system

Why this matters

Honest folks need to know that ethical businesses have their backs and are coming down hard on credit card fraud.

As a consumer, you want your e-bookseller to be onto this.

For publishers and authors, when someone steals your ebook with a hacked credit card, your ebook is, quite literally, getting into the wrong hands. We don’t know what else fraudsters do with your ebooks but there’s no question: you don’t want a growing collection of your IP in the hands of fraudsters. QUASH stops them cold.

And, because QUASH only nails real fraudsters, eBooks.com sells a lot more of your titles than we would if we simply whacked away every transaction that looks a bit unusual. This has to be good for authors, publishers and readers alike.

Further reading:

Chargeback Stats for 2017

Identity theft, credit card fraud cost US consumers $16 billion in 2016

Reducing false positives in credit card fraud detection

eCommerce Growth Drives Rise in UK Card Fraud

This article was updated 5 August 2019.

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