Hemper Case Study
Chargeback losses eliminated
Annual overhead eliminated
Founded in 2015, Hemper designs, manufactures, and sells smoking accessories and subscription boxes for the cannabis industry. Now grossing seven figures annually, Hemper is rapidly expanding its market share and was recently featured as a 2019 Inc. 5000 company.
As a fast-growing eCommerce business, Hemper relied on Shopify, its eCommerce platform, to screen for fraud.
When purchases were flagged as potentially fraudulent, Hemper didn’t have efficient systems in place to handle them — their six-person customer service team had to manually review the orders with limited information on the transaction’s risk factors, place them on hold, and reach out to customers for verification. This laborious process put a strain on manpower and customer relations.
The catalyst to make a change occurred in the summer of 2018. Hemper’s third party checkout system was being targeted by a massive card testing attack. Scammers were using their website to test stolen credit cards. Because Hemper was growing so quickly, they didn’t have time to keep track of all the fraud attempts that did get through the processor, and chargeback losses kept mounting.
By midsummer, Hemper’s chargeback losses ballooned to 20K/month in one month. They knew they needed a better solution that would not only prevent all fraud attacks, but also relieve their customer service team from the arduous manual review process they had in place.
To combat the company’s growing problem with fraud, Hemper turned to Shopify for support, who recommended using a fraud prevention app with a focus on automation.
Hemper chose the app with the highest ratings in the Shopify app store and decided to give it a try. The NoFraud installation process took only a few minutes and immediately began screening and auto-declining fraudulent orders.
Once NoFraud was installed, the chargeback losses dropped dramatically from 20K/month down to $0 nearly every month.
NoFraud worked with their third-party checkout system and advised them on different measures they could institute to stop the card testing, which were implemented successfully. All fraudulent transactions were automatically identified and canceled, or a hold was placed on the order while NoFraud completed the review for a final determination on the transaction’s legitimacy. No longer needing to manually review high-risk orders, Hemper was able to cut their six-person customer service team down to two full-time employees and one part-time employee, reducing their overhead by $140K annually.
“Since implementing NoFraud, our fraud challenges disappeared overnight. Their expert guidance was critical during the card testing attack and we rely on them for the smooth functioning of our operations. My only regret is previously insisting that the DIY approach was superior to an outsourced solution for so long. Implementing NoFraud earlier would have saved me a lot of time, money and stress.”Angel Ferrer
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