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How BHFO leveraged Guaranteed Fraud Protection on its path to designer apparel juggernaut 

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BHFO’s journey into the retail world began two decades ago when Jon and Stacie Sefton went shopping for a camera. It was 2003, and online shopping hadn’t yet hit the mainstream. Amazon was still selling mostly books, and eBay was a diverse marketplace still establishing itself. The camera the Seftons wanted retailed locally for $1,000, but Jon checked on eBay and found it for $600. And it came with more accessories!

It was a transaction that changed their lives.  

The Seftons took that $400 they saved on the camera and invested it in a book about how to build a million-dollar business on eBay, according to The Gazette, of Cedar Rapids, Iowa. The book cost $400 –– true story. They set up shop in their basement in Iowa and partnered with a lingerie company to sell its shelf pulls and returns on eBay. Jon kept his day job and Stacie ran the operation.  

BHFO circle logo

In those early years, they’d wake in the middle of the night to check their auctions on eBay and were encouraged by what they saw.  People from all over the world were placing bids. And with each new load of product that came in, they’d sell out.  

So the Seftons decided to go all in. They moved the business out of their basement, expanded their product line, and decided that Jon would quit his day job, the latter of which Stacie says had people thinking they were crazy — but not for long.  

BHFO found its growth path early

BHFO (named for the first two initials of their daughters’ names, and Factory Outlet)  grew rapidly as a fashion outlet for brand-name clothes, accessories and shoes. With Stacie as the CEO, it launched its own website, staffed up with 160 employees and eventually moved into its present 240,000-square-foot warehouse. 

BHFO and Signifyd by the numbers

BHFO is one of the hottest brands in designer apparel. It grew from a basement operation to an online must-shop. Along the way, it encountered fraud and abuse and found Signifyd as a commerce protection partner. After deploying Signifyd, BHFO saw:

  • Its approval rate reach 99.66%
  • Its chargebacks decrease by 69%
  • Its losses to chargebacks drop to $0.

 

But along with the success came the worry and reality of fraudulent transactions. BHFO was working with a fraud prevention provider but felt its overly conservative approach was turning away good customers.

“Our previous partner was impacting our operations because they were blocking transactions when they were genuine,” says Sofia Giussani, BHFO’s senior director of digital marketing and ecommerce.  

BHFO was losing sales it could have made to legitimate customers, whom, perhaps insulted and hassled by the experience, might never return. More so, BHFO employees struggled to keep up with the suspect orders sent to them for manual review.  Fearful of a transaction being fraudulent, approvals were slow and resulted in poor fulfillment times and unhappy customers. This was quite the opposite of a seamless shopping experience.

Signifyd increased BHFO’s approvals and lowered chargebacks

BHFO knew it needed a new approach to handling risk and turned to Signifyd’s Fraud Protection and Abuse Prevention solutions. The results raised BHFO’s order approval rate to 99.66% and decreased its chargebacks by 69%. The high approval rate “means that I’ve got good clients,” Giusanni says. “But even if there is a fraudulent one, I’ve got that peace of mind that everything is taken care of.” 

Signifyd’s Commerce Network utilizes transaction intelligence gathered from thousands of ecommerce retailers globally to determine the identity and intent behind every order.  By understanding the who and why behind each order, Signifyd can identify and block emerging fraud and consumer abuse trends instantly.

Its decisions to approve or disapprove a transaction are delivered in real time,  eliminating the delays caused by manually reviewing transactions.

“When it comes to fraudulent payments, you can forget about it,” says Giussani. “With Signifyd you can really have a fantastic partner that takes care of it immediately. So it’s a win for you as the vendor and it’s a win for your customers because they don’t have to wait.”

Giusanni says Signifyd’s fraud prevention has also alleviated her stress of dealing with large orders on the wholesale and reselling sides of the business, which allows her to pursue additional B-to-B expansion opportunities. “We now don’t have to interrupt operations anymore because of that fear of fraud,” she says. “We are fearless.”

BHFO found the returns sweet spot

In ecommerce, an enticing and persuading lure for a shopper is a free, easy, quick and flexible return policy. So while it’s important to handle returns happily to retain customers, it’s also an area fraudsters like to game. BHFO walks this tightrope daily, and it was another area where Signifyd’s experience was needed. 

All returns are costly to merchants, with even the expense of valid returns at times surpassing the face value of the product. But it’s the abusive returns that cost merchants the most. About 21% of all products purchased online are returned, according to the National Retail Federation, and 10.6% of those returns are fraudulent. 

By comparison, only about 9% of brick and mortar sales elicit returns. Overall, U.S. retailers lost $23.2 billion to online return fraud last year, the NRF says.

With return fraud growing, technology provides an answer

Return fraud and abuse manifest themselves in a number of ways: a customer purchases an item with the intent of using it first and then returning it; or keeps the original item and sends back some lesser value item in order to score a refund; or purchases a number of versions of the same item with the intention of keeping only one.  

And then there are other forms of abuse, such as false item not received (INR) claims and false item significantly not as described (SNAD) claims. 

“Now we really have Signifyd helping us with that because the cost of a return is enormous for a company,” Giussani said. “So if we can prevent people from abusing returns that is great for us, and we couldn’t do that before. “And now, with Signifyd, we are capable of doing that.”

Photo courtesy of BHFO


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Maryann Hudson

Maryann Hudson

Maryann Hudson is a freelance writer based in Southern California. She is a former investigative reporter for the Los Angeles Times and the author of two books dealing with issues in youth sports. She is the editor of thecensustakers.com and a regular contributor to the Signifyd blog. Contact her at thecensustakers@gmail.com; or on Twitter @thecensustakers.