The challenge

A popular quick-service restaurant chain was hemorrhaging money – not from rising food costs or fierce competition, but from fraud. Fraudsters systematically used stolen credit cards and fake identities to steal money, both in-store and through the chain’s mobile app.

When criminals use stolen payment cards, banks eventually discover the theft and reverse the charges, in what are called "chargebacks." Having deemed the purchases fraudulent, the financial institution restores the money to the cardholder. This is an essential protection for consumers, but can be financially devastating for businesses. 

In this case, the chain lost a huge share, 10% of total revenue, to chargebacks. Fraud at that scale doesn’t just hurt profits; it threatens businesses’ survival. 

Quick-service restaurants are particularly vulnerable to fraud for various reasons: fast service can mean rushed payment verification, mobile orders are on the rise and digital transactions are easier to exploit, and high transaction volumes present more fraud opportunities.

Our solution

We put TTEC’s intelligent fraud automation to work, pairing an AI-powered fraud-prevention platform with expert fraud investigators. Our solution harnesses the power of machine learning (ML) fraud detection and prevention to analyze every credit and debit card transaction to identify patterns. 

AI analyzes every transaction in real time, looking for:

• Geographic anomalies: Is a card being used far from its owner’s usual location?
• Behavioral problems: Does the purchasing behavior match the cardholder’s history?
• Velocity checks: Are multiple orders being placed suspiciously fast?
• Device finger printing: Is the same device being used for multiple fraudulent attempts?

The tool is incredibly powerful, but AI is only as smart as the data teaching it. TTEC's fraud investigators became the teachers, manually reviewing and labeling thousands of historical transactions to train the system.

This human expertise is crucial because: 

• AI excels at obvious fraud but struggles with borderline cases
• Fraudsters constantly evolve their tactics, requiring human judgment
• False positives hurt business, since blocking legitimate customers is almost as costly as fraud

Accurate labeling of data is critical in ensuring the ML algorithm works properly and TTEC’s investigators are highly trained in this intricate work.

The results

Through this work, the chain saw a massive reduction in fraud-related losses per order. Our work with the client is ongoing and TTEC investigators label approximately 1,500 transactions per month. Our ongoing human oversight keeps the AI sharp. 

Thanks to our work, the chain’s chargeback rate has fallen from 10% percent of revenue to less than 1%. For a chain that processes millions in transactions monthly, this reduction represents millions of dollars in saved revenue. 

Our work also gives the chain: 

• Stable cash flow for business operations
• Protection from financial institution penalties that could shut down payment processing
• Customer trust in secure payment experiences
• Competitive advantage through superior fraud protection

This client’s experience demonstrates how combining AI efficiency with human expertise creates a fraud-fighting approach that's scalable, adaptive, precise, and sustainable. 

Other companies can have similar success. As fraudsters become more sophisticated and payment fraud costs the restaurant industry billions annually, this hybrid AI-human approach offers a blueprint for other businesses facing similar challenges.

Our fraud prevention work continues to evolve, staying ahead of fraudsters who constantly develop new schemes to exploit restaurant payment systems.