Q+A: The $300,000 attack that changed this company's fraud strategy
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What is the main topic discussed in this episode?
Welcome to Fear and Greed Q&A, where we ask and answer questions about business, investing, economics, politics, and more. I'm Sean Aylmer.
How did Luxury Escapes describe the growing threat of online fraud?
For most businesses, fraud is a constant background threat. As online commerce grows and AI gives fraudsters increasingly sophisticated tools... staying ahead of bad actors has become one of the biggest challenges for digital businesses. Luxury Escapes processes millions of transactions each year, making fraud prevention a critical part of the customer experience. Working along Stripe, Luxury Escapes has embraced AI to tackle the problem in a very different way. Joshua Poehling is Director of Engineering at Luxury Escapes. Stripe is a great supporter of fear and greed. Joss, welcome to Fear and Greed Q&A. Thanks a lot for having me, guys. How big a problem is online fraud for a business like Luxury Escapes?
How severe was the $300,000 fraud attack and what did it reveal?
Well, it comes and goes in waves. When it's a wave, it's a very big problem. So last year in October, we had a massive wave, the biggest, most sophisticated wave of fraud we'd ever had. And we got hit with about $300,000 in fraudulent orders in the span of a week or so. But more typically, it's sort of background noise. It's always there, and then it comes and goes in waves. And the trouble is when a wave starts coming, you don't know if it's a guy in his mom's basement who's found a stolen credit card on the street, or if it's a big network of sophisticated fraudsters who have a list of thousands of cards that they've bought and are in this for a good week or two.
Okay, so we might get to what happened last year in a moment. But firstly, most people think you've got to eliminate fraud completely. Now, off air, we were talking about it. Actually saying you have to get zero fraud is not necessarily the right approach, is it?
no so we we were actually doing that in 2024 we're sort of blocking everything that looks like fraud and there's this asymmetry where the the noise that a fraudulent order makes is is huge but the silence that 10 genuine blocked customers make because you thought they might be fraudulent so you blocked them uh is is not there so if you want to
Why is aiming for zero fraud a flawed strategy for online businesses?
If you want your manager to think you're doing a great job of fraud, you can block out everything that looks like fraud and you'll have no fraud, but you'll have a lot of cross-catch. But if you really want to do a good job, the right amount of fraud is above zero. And we did an engagement with Stripe at the beginning of 2025 and they helped us tighten up our fraud rules a lot. We actually unlocked about a million dollars a year in genuine customer TTV that we had been blocking due to overly aggressive fraud rules.
Okay, so TTV stands for? Oh, sales basically, total transaction value. Yeah, okay. So the point here is if you really hard and fast on fraud, you're actually missing sales. Absolutely.
So you want to get your net such that it's pretty high signal.
How did Luxury Escapes' partnership with Stripe change their fraud rules?
You want to figure out what are the high signal things that are like catch 90% fraudsters and only 10% genuine customers, but you want to lose anything that's sort of more 50-50 or 70-30.
So let's run through your fraud journey for want of a better phrase. And I will never use that journey again, Joss, I promise. How did LuxuryScape start thinking about fraud? And then you started working with Stripe and you've kind of gotten to the point where you think about it differently. I'm kind of interested in how you progressed to where you are now.
Yeah. So, I mean, I've been involved at different levels over the past couple of years, but I'll give you a summary of sort of, I'd say there's four key steps in my involvement over the past few years. In 2024, we were overblocking, as I talked about, and that was kind of nice in a way, and the fraud was pretty quiet. We felt like we were doing a pretty good job. January 2025, we did this engagement with Stripe and we massively tightened up our rules and they were really good at figuring out which rules are high signal versus which rules we need to delete. The big aha moment there was the right amount of fraud is not zero.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:06–0:13
2
How did Luxury Escapes describe the growing threat of online fraud?
0:13–0:58
3
How severe was the $300,000 fraud attack and what did it reveal?
0:58–2:17
4
Why is aiming for zero fraud a flawed strategy for online businesses?
2:17–3:01
5
How did Luxury Escapes' partnership with Stripe change their fraud rules?
3:01–4:21
6
What was the points-based fraud scoring system and why did it struggle?
4:21–6:13
7
How did the team discover that large language models could detect fraud?
6:13–8:21
8
How does Luxury Escapes combine OpenAI analysis with Stripe Radar in real time?
8:21–11:31
Speakers
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