#49 - 4 mistakes that stop fraud teams from scaling

Automating your fraud operations can be as frustrating as it is unglamorous.

No one wants to deal with it, but there comes a point in every company’s lifecycle where it is a must.

The fraud ops team is bloated, relies on half-baked internal tools, slows down the organization, and requires more warm bodies as the company grows.

Worst of all, any attempts at modernization are encountered with skepticism and resistance.

Instead, all you get is more requests for additional tools, vendors, engineering resources, etc. Basically, more requests for more money.

As such, many of the organizations I’ve helped throughout my career were incredibly frustrated and stuck in the same place for years. Usually, they’ve made some–if not all–of these mistakes:

Mistake 1: The kill-switch

Some teams, especially if relatively small, try what seems like the “cleanest” solution:

Establish a parallel fraud analytics team and cut over all operations to it at once (usually accompanied by firing the fraud ops team members).

The emphasis is on the word “try”.

This never goes according to plan, and I never saw a case where the newly formed analytics team managed to take responsibility for operational tasks smoothly.

These companies find themselves in an even worse situation once their plan encounters reality: 

They’re now spending even more on resources, accountability is spread between multiple parties, and there’s no clear way forward.

Things are never as simple as they seem. 

Your slow and frustrating fraud ops team? They know your business inside and out. They know your traffic and its seasonality patterns. They know your data issues and how to go around them.

Your newly formed analytics team? They are still trying to get access permissions to that event status dictionary table.

Mistake 2: Letting fraud ops lead it

I’ve seen this way too often.

“Our fraud ops team is the domain experts, so we’ll just ask them to propose a plan for automating their work, and execute it“.

Usually, the fraud ops team lead would be the one tasked with this project.

Let’s put aside for a moment the fact that we just asked them to automate themselves and their team out of their jobs. This on its own is enough to scrap this idea, but let’s ignore it for now.

What these companies miss is the fact that fraud operations and fraud automation are not the same role.

They are both within the same knowledge domain but they rely on different skills, mindsets, education, and compensation levels for that matter.

In fact, they are worlds apart and asking either team to do the other’s job can only end in failure and frustration (been there, done that).

Furthermore, an aspect of the mindset gap is that many fraud ops teams don’t even believe their work can be automated.

Learning about such plans doesn’t only lead to job insecurity, but for general skepticism even in the case that their jobs are secured.

Placing the responsibility on these teams to re-imagine their own roles can only lead to (un)conscious self-sabotage and the inevitable conclusion that it cannot be done.

Mistake 3: Not involving fraud ops

Often, the result of encountering resistance from the ops team leads to segregating them from the project or–in extreme cases–even hiding it entirely from them.

But as we figured out in Mistake 1, this can only end up backfiring.

Automation is the process of codifying a “tried and true” process. 

Automation is not about actual coding skills or tooling. It’s about transforming a human-driven process into algorithmic form.

This includes undocumented best practices, logical shortcuts, accounting for edge cases, escalation paths, and so many more intricacies that are part of any process.

Automating something you never ran manually yourself will always, always, result in suboptimal results.

The best automation projects I’ve seen always combined both skills sets in the task force. 

Fraud ops have intimate business and domain knowledge, the “know-how”, while analytics provide the right mindset and the technical chops to codify that knowledge.

Mistake 4: Not incentivizing fraud ops

Which leads us to the final mistake I often see teams make:

If we must have fraud ops be part of the process, but we know they are skeptical and are afraid for their livelihoods, how do we reconcile the two?

It is actually quite simple–you find ways to incentivize them.

The most straightforward way of doing so is giving them the opportunity to upskill during the project so they can later switch to other, better-paying roles. Say, the fraud analytics team.

Make them feel like they are part of your vision of the future, and that you’re willing to invest in them to bring them along with you.

Of course, that doesn’t mean you need to offer it to everyone, or even to promise it regardless of performance. But it’s enough to offer it to key members on your team to completely transform the project’s results.

How to avoid these mistakes

Automation projects are usually more challenging than they seem at the outset.

They are fraught with unseen pitfalls, and they present immense people management complexities.

But if you want to do it right, all you need to do is adhere to these simple tenets:

• Go slowly

• Entrust the project to the hands of automation experts

• Involve your fraud ops team in the process

• Address directly any motivational/skepticism issues

Curious to hear if you have other tips you’d like to share, or additional mistakes you’ve seen being made by over-optimistic leaders. Hit the reply button and let me know.

In the meantime, that’s all for this week.

See you next Saturday.

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