MRC, Las Vegas 2012 - Diarmuid Considine, SKYPE: "We are not associated with fraud"

Founded in 2003, SKYPE is a communications software based in Luxembourg and owned by Microsoft. The service allows users to communicate with peers by voice, video, and instant messaging and includes additional features such as file transfers and videoconferencing. It has over 1200 employees in 12 cities globally and has in excess of 170million connected users.Diarmuid Considine is the Fraud and Payment Operations manager at SKYPE, based in Tallinn, Estonia since 2009. He has previously worked in Sydney as the Fraud Manager of Virgin Mobile Australia and in Ireland for ESAT Digifone (now O2).

Usually, SKYPE is associated more with voice calls, internet telephony and less with fraud. However, as in all business models that require online payments, fraud is a reality. What are some of the main types of fraud-related issues that you have experienced?

Diarmuid Considine: It’s correct to say that we are not associated with Fraud but that is as a result of a lot of work in this area over many years. It is a reality that any company that provides paying services will be targeted by fraudsters and we are very dedicated to reduce and mitigate this as much as possible. Taking payments online globally means that CNP fraud is prevalent facilitating profit sharing schemes and online auctioning of accounts and credit.

Fraud has lately become a startling issue for VoIP carriers and providers. Why are VoIP providers suddenly being targeted for fraud and how can one recognize a fraudulent VoIP provider?

Diarmuid Considine: I am not so sure that it has been such a recent phenomenon but there is no doubt that it is a major concern. More and more customers are attracted to VoIP for a new communication experience while seeking out alternative better deals financially to their current providers. As that adoption increases, fraudsters are going to see if they can use this to their advantage. There is also a perception that VoIP might not be as mature in its fraud prevention capabilities versus the more established landline and cellular industries. Additionally, there is a greater level of anonymity in VoIP which fraudsters can benefit from unless the correct mitigations are put in place.

This year, your company has won the Merchant Risk Council Spotlight Award at the MRC annual conference in Las Vegas. Could you elaborate a bit on the degree of innovation in your approach to managing risk?

Diarmuid Considine: I think that the Merchant Spotlight award is a wonderful initiative started this year by the MRC as it encourages merchants to share best practice around Risk and/or Payments. It really has meant a lot to SKYPE to have received the inaugural award.

The fraud team, supported by the wider department and PSPs, changed its mindset by taking on and delivering against a challenging revenue target whilst maintaining low fraud levels. We realized that we were processing a huge amount of positive data about good customers and could use a fraud problem-solving approach to enhance customer experience. The attention then that we paid to our good customers actually helped us to further fine tune our fraud mitigation practices so it had a dual benefit financially and really raised our profile within SKYPE.

Which are the main areas of fraud in VoIP today, and how can service providers protect themselves?

Diarmuid Considine: I touched on this earlier, but the main threats come from CNP with the view to monetizing out through profit sharing schemes. There has definitely been an increase also around Account Take Overs (or account hijacking) in the last year across the industry due to an increase in malware, phishing and weak passwords being shared across a customers’ online merchant accounts. With the recent introduction of more competition into the VoIP market place, it presents more opportunities for fraudsters to seek out the least protected company in terms of fraud prevention. In this respect, I believe that engaging with organisations like the Merchant Risk Council to get business best practice is essential to protect your company and customers.

Your Anti-Fraud Department (AFD), part of Skypes Business Operations Group, has moved from a cost of doing business towards a commercial insight team concept. What does this entail?

Diarmuid Considine: Our main focus in SKYPE is to know and protect our customers and to reduce fraud as much as possible without restricting legitimate revenue. To this end, we have invested heavily in our infrastructure to provide us with the right tools and databases which our highly skilled team of analysts use to achieve this. To make the move towards a revenue contributor through commercial insights, it really takes the support of senior management and a change of mindset around your risk appetite. It has to be understood that achieving significant financial returns does not come without associated risk.

Fraud teams should take on the opportunity to utilize their data and knowledge of behaviour patterns not just to improve blocking algorithms, but to reduce payment flow friction. Critical analyses of all of the fraud restrictions on legitimate customers can lead to reprofiling to higher credit limits, relaxing velocity controls, increasing payment types etc. for legitimate customers.

In your opinion, the future of online fraud prevention will largely depend on …

Diarmuid Considine: Collaboration on best practices and their timely adoption. Preventing fraud should not be seen as a competitive advantage because this is what plays into the fraudsters hands. Of course, it is essential to adhere to data exchange regulations but any company trying to ‘go it alone’ in fraud prevention is, in my opinion, going to come unstuck. I think also that greater communication between the major stakeholders e.g. merchants, card issuers, acquiring banks etc. would yield significant returns but I do concede that it’s a huge undertaking.

This interview was published in one of the special editions of our premium newsletter Online Paypers, focused on online fraud. You can take out a free trial here.