Account abuse and after-the-fact billing = chargebacks
Early on, technical cofounder Simon Kreuz—who built Shippo’s first API—was able to combat any fraud with an internal fraud prevention tool. The Shippo team found that fraud was generally easy to identify because fraudsters followed a pattern, which allowed them to build their own solution. But as time went on and Shippo’s business grew, the fraudsters hitting the app got more wily.
Shippo found that the majority of their fraud fell into one of two categories:
1. Users who sign up with a fake email address and use a stolen credit card number.
2. Users who create labels, hit the threshold, and then create a new account to avoid paying their invoices.
In both cases, Shippo lost money – whether from chargebacks from the accounts with stolen credit card numbers or lost revenue from the unpaid invoices. Shippo needed a solution that could preemptively identify account abuse and prevent users with stolen credentials from purchasing; after a label is generated and used, it’s already too late. It soon became apparent to Simon that his team’s time was better spent growing the business rather than updating their internal tool, and he turned to Sift to stop Shippo’s fraud problem.