Ethoca News Releases

TigerDirect Roars Back Against Fraud With Ethoca

Collaboration to Enhance E-Commerce Profits by Slashing Manual Reviews -- Improving Customer Experience and Reducing Costs by Confidently Accepting More Positive Transactions

(MARKETWIRE) September 22, 2008 - Ethoca, the leader in collaborative fraud management, announced today that it has reached an agreement with Systemax Services, a company that is an affiliate of, and provides management services to, TigerDirect.com and CompUSA.com.

News Facts:

• TigerDirect.com and CompUSA.com -- two of the world's largest -- are the latest to join the Global Fraud Alliance, which is committed to working together to make e-commerce safer and more profitable.
• Ranked as a top 10 etailer by Hitwise market research (#6 for Appliances and Electronics category), TigerDirect is regarded as an industry leader capable of spurring others to action. TigerDirect recognizes the power of community to thwart fraud and is actively encouraging other businesses to join the fight.
• Nearly 98 percent of online transactions are legitimate, but most fraud management solutions fraud management solutions focus on the 2 percent that are fraudulent. To keep this fraud rate low, online businesses refer more than 27 percent of transactions for manual review. Yet after review, more than half of all merchants accept over 90 percent of these orders and 2/3 of merchants accept more than 80 percent. Put simply: the largest online businesses spend millions of dollars annually to inspect orders manually, 80 percent or more of which could be saved if they had better experience data to screen for good customers. Ironically, this money is spent to protect against the small minority of actual fraudulent transactions.
• The primary reason for such a large percentage of manually checked orders is a lack of prior experiences with the customer. That is where Ethoca fits into the puzzle. The Global Fraud Alliance powered by Ethoca is the only source of positive experience information about customers that have yet to make a purchase at a particular merchant, and the only way to cut down on the 80 percent or more of manually reviewed orders that didn't require checking. Manual reviews represent by far the largest cost of managing fraud, and are often the source of processing and shipping delays that degrade the customer's experience.
• The ability to quickly and automatically separate the good transactions from the bad will mean lower direct fraud cost; fewer resources dedicated to manually reviewing orders; faster turnaround on customer orders; fewer falsely rejected good orders (meaning higher revenues) and a significantly better customer experience. Most tools, if they can deal with this problem at all, attempt to sort which orders are good based on predictive scoring algorithms or evaluating other risk factors using scant information -- in other words, they guess, they don't know -- which is the primary source of errors both in accepting bad orders and refusing good ones.
• Fueled by the 20 percent annual growth rate in Internet shopping, customer-not-present transactions are rapidly becoming the primary source of payment fraud. With much of TigerDirect and CompUSA's revenue coming through customer-not-present environments, TigerDirect and CompUSA must be ever more vigilant and employ state-of-the-art fraud prevention techniques to protect its bottom line and its customers. Collaborative fraud management is the most powerful technology to fight customer-not-present fraud.
• The announcement of TigerDirect and CompUSA's participation is a crucial milestone in the development of the Global Fraud Alliance in North America, both validating its effectiveness as an approach and leading others to join in the fight, while making a significant contribution to the pool of shared experiences.
• Ethoca's collaboration technology is enabling the Global Fraud Alliance to coalesce as a powerful force against online crime by securely connecting its members to a collective pool of member-provided payment experience information. Community members are empowered to make more informed decisions about their customer transactions in a way that is efficient, effective and ethical, and in no way a competitive threat.

QUOTES:

• "The rapid growth of eCommerce demonstrates the ease, time-savings and convenience that consumers associate with online shopping, and its importance to the overall economy. We've worked diligently to build this business and establish ourselves as industry leaders, but fraudsters threaten to undermine us, attacking our profits and eroding consumer confidence," said Gilbert Fiorentino, President of Systemax Services. "It bothers me personally to see any credit card fraud, but more than that, we can't allow fraud to eat away at the tremendous productivity, cost-savings and choice that the Internet offers consumers. We have a responsibility as business leaders to provide a safe shopping environment, and to protect the livelihoods of our employees and the earnings for our shareholders. Joining together with the Global Fraud Alliance is one of the most important thing we can do to help us make better order-processing decisions, as it not only provides benefits on its own, but it will improve the effectiveness of all our other fraud management tools and techniques as well."
• "TigerDirect and CompUSA's commitment to the Global Fraud Alliance is important, because it not only deals a major blow against online fraud, but sends a signal to the industry that working together is better than working alone to deter crime," said Andre Edelbrock, Ethoca's CEO. "When companies the caliber of TigerDirect and CompUSA's take notice of the value of community and show their willingness to collaborate with others to defeat fraud, you can bet that the rest of the industry won't be far behind."

About Ethoca

Working in partnership with forward-thinking businesses, individuals and law enforcement, Ethoca is making e-commerce safer and more profitable by building and powering the Global Fraud Alliance.

To be more successful in combating fraud, companies must collaborate across and within industries by securely sharing transaction experiences in a way that is not a competitive threat. Ethoca enables businesses that operate in customer-not-present environments (Internet, phone, fax or mail) to make more informed decisions about their customer transactions, by sharing transaction experience data in a way that is secure, automated, effective and ethical. Community members see reduced fraud, lower fraud-related costs, increased revenue from fewer wrongly rejected orders and improved customer satisfaction rates.

Ethoca™ is a registered trademark of Ethoca Limited. For more information about Ethoca visit www.ethoca.com.

About TigerDirect

TigerDirect (http://www.tigerdirect.com) serves the needs of both personal and business computer users, selling consumer electronics, computers, digital media technology and peripherals via retail stores, catalog and Internet channels. TigerDirect is a subsidiary of Systemax Inc. (NYSE: SYX).

About CompUSA

CompUSA (http://www.compusa.com) serves the needs of both personal and business computer users, selling consumer electronics, computers, digital media technology and peripherals via retail stores, catalog and Internet channels. CompUSA is a subsidiary of Systemax Inc. (NYSE: SYX).

About Systemax Inc.

Systemax Inc. (http://www.systemax.com), a Fortune 1000 company, sells personal computers, computer supplies, consumer electronics and industrial products through a system of branded ecommerce web sites, direct mail catalogs, relationship marketers and retail stores in North America and Europe. It also manufacturers and sells personal computers under the Systemax and Ultra brands and develops and markets ProfitCenter Software, a web-based, on-demand application for multi-channel direct marketing companies.