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Should You Reject Unresolved Held Orders by Default?

A common underlying assumption when merchants review orders in a queue is that, if the agent reviewing the order is still unsure whether to release the order after looking it over, the agent will reject it by default. This might make sense, based on the situation, but it bears weighing the pros and cons.

Let’s do a little math to illustrate the point. Say I’m a manual reviewer, considering what to do about a $200 order, with a 20% profit margin. I’m completely on the fence — in my judgment, there’s a 50/50 chance it’s fraud. If I reject the order by default once I’ve finished my investigation and I’m still stumped, I have a 50% chance of gaining $200 (the avoided fraud) or losing $40 (the profit on the lost sale). Over time, rejecting these orders should net me $80 in gains on average (50% of $200 minus 50% of $40).

1. Assumptions
Assumption

Each order is $200 with a 20% profit margin.

2. Investigation
Investigation

Reviews have determined that the orders have a 50% chance of being fraudulent.

3. If all orders are autorejected...
Over time...

Your net gain will be $80 on average, if each order has a 50% chance of being fraudulent.

Now, suppose instead that I’m leaning toward it being a good order — I'm not certain, but I estimate there’s a 90% chance it’s good. If I reject the order, I have a 10% chance of gaining $200, and a 90% chance of losing $40. Over time in this case, rejecting these orders should net me $16 in losses on average (10% of $200 minus 90% of $40).

2. Investigation
Investigation

Reviews have determined that the orders have a 10% chance of being fraudulent.

3. If all orders are autorejected...
Over time...

Your net loss will be $16 on average, if each order has a 90% chance of being fraudulent.

A good practice is to give anyone doing manual review on held orders a variety of options to indicate why they did what they did. Something like “accepted with certainty” and “rejected with certainty” for when there’s no doubt whatsoever that the order was good or bad, and “accepted with reservations” and “rejected with reservations” for when they were unsure but made a call one way or another. Review your team’s decisions and get a sense of how accurate their gut feelings are, and give guidance appropriately.