Read more about fraud prevention in subscription ecommerce and how credit checks can prevent subscription fraud. 

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circuly has partnered with CRIF Buergel to support subscription and rental businesses in preventing chargebacks and subscription fraud. 

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Learn more about circuly's credit check and fraud prevention for subscription-based business models.

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The problem.

Subscriptions lower the financial barrier of getting access to a product. 7/10 times it is a good thing as it can help increase your customer base by making your product attractive and available to a larger audience.

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‍But you also attract customers who have a low credit score or are not creditworthy. 

The implication.

You increase your risk of payment withdrawals. And that risk is magnified because unlike a normal selling model where you face the threat of a failing payment only once, in a rental business model with recurring payments, you have to tremble with a non-payment or chargeback every month or sometimes even week.

The solution.

How do you decide which customer to swipe left ❌ and which customer to swipe right ✅ ? 

With a credit check integration in your checkout flow, you can get insights into your customers* risk profile and decide if you want to accept or reject a customer. 

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When is a credit check done?

The credit check takes place in real time when the customer is on your checkout page and has entered their payment details but before they proceed to the Order confirmation page.

After the customer enters their payment details a credit check request is being sent to CRIF via their API and circuly receives a response for the request from CRIF in real time. 

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How CRIF sends back the credit check request? 

When CRIF performs a credit check on a customer, the result that it sends back includes traffic lights (red, yellow and green) and some additional information that helps you determine the credit worthiness of the customer (either automatically or manually) and act upon it (that is accepting or rejecting the customer). 

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Automated and manual processing of credit check information 

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Option 1: Automated check and automated processing 

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With the automated check option you decide once which traffic light you want to automatically accept. Once you define that, your customers will be automatically accepted/rejected on the checkout.

You can decide upon a message that will be shown to customers that are rejected based on CRIF’s credit check.

Note: To set up the message that will be shown to customers that are rejected on the checkout, write a service desk ticket and our customer success team will set up your custom message.

Refer to the image below to see how the rejection message appears on the checkout page.  

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Option 2: Automatic check and manual processing

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With option 2 the credit check is still being done automatically and in real time but instead of rejecting customers on the checkout you can accept customers and receive the credit check results in the Order Overview in your circuly operations backend. 

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You can then go over the credit check results and manually decide whether you want to accept or reject the customer based on the scoring insights. 

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Customer accepted: if you decide to accept the customer, process the order how you regularly would 

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Customer rejected: If you decide to reject the customer you can cancel the order and do a full refund (if payment was already deducted) 

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You can inform the customer for rejecting their order  when you do a refund. In the refund window you’ll find an input field that you can use to write a custom message. 

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Note: If you use the Delay charge in checkout setting and use the delay initial payment feature, then their will be no payment charged hence no need to refund the payment. 

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How to access the credit check report?

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In your circuly Operations Backend > Go to the Orders Tab > Click on an Order from the Order List > In the Order Overview Window you’ll see CRIF  score under the CREDIT CHECK SCORE section > Click on the eye icon to display full information on the credit check. 

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Here’s an example (see image) of how the credit check information is shown. 

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How to read the CRIF score?

The final CRIF decision is based on several policy rules that CRIF has defined based on their B2C ecommerce experience. CRIF does not support any individual customisations. 

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The overall decision is based on address validation, identification, house type, name validation, person status, trust rank and negative examples. Each of these factors will receive either a green, yellow or red scoring result. 

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Note: the availability of the factors may vary between countries. In Germany all mentioned factors are available. However if you are based outside of Germany and want to perform credit checks on customers that are not based in Germany, you can get in touch with our customer success team to get country specific information. 

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Address validation - it is indicated to what extent the request address is known. 

Identification - it is indicated to what extent the requested person is known. 

House type - the purpose of the requested house is specified. 

Name hint - It is indicated to what extent the requested name can be regarded as real. 

Person status - a person status is given in relation to the age of the requested person. 

IDs - ID Stability evaluated anomalies at the requested address - looks at negative experiences. 

Trust rank - the trust rank rates the stability of a requested address - looks at positive experiences. 

Negative examples  - It is indicated, whether there are any negative entries for that person (e.g. prejudicial collection, judicial title, entry in debtor’s register, insolvency)  

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Traffic lights

Red - not creditworthy

Yellow - restricted creditworthiness

Green - creditworthy

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All these factors are the basis of three main pillars:

• Ident - based on a location and identity check.
• Credit - based on negative experience. 
• Fraud & Trust - based on identity stability, suspicious houses and trust rank. 

For a detailed overview, refer to this resource.

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Summary

With the circuly CRIF integration you have two possibilities:

• Refuse customers in the circuly checkout - circuly uses the CRIF API to determine the creditworthiness of the customer as the customer fills in their details in the checkout and rejects them if they have a low score. This way you avoid costly chargebacks but at the same time reduce your conversion rate in the checkout process. 

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• Refuse customers in the circuly operations backend - Get real-time credit check data in your order information when starting a subscription you get the information about the credit worthiness of the customer at a glance in the circuly operations backend and can decide for yourself if or not you want to accept her/his order. You can decide if the credit score is sufficient, or, if not, you can cancel and refund the order right from the circuly operations backend.

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With rapid growth rates in e-commerce, the topic of online fraud and payment defaults is more relevant than ever. The e-commerce industry is predicted to overtake physical in-store sales by 2027 with a global market volume of USD 6.52 trillion. This article deals specifically with the prevention of chargebacks.

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If you want to learn more about how circuly can help you make your rental business ready to scale, get in touch via info@circuly.io and let’s have a virtual coffee together!

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