An Interview With Martita Mestey
By leveraging recaptured data from the criminal underground, companies can have a better insight into criminal workings and can help thwart fraud much earlier in the cycle, all with a seamless customer experience.
As part of our series about the future of retail, I had the pleasure of interviewing Pete Barker, Director of Fraud and Identity for Austin-based cybersecurity company SpyCloud, the leader in account takeover and fraud prevention.
Pete has spent more than 25 years in the fraud and investigations space. Before joining SpyCloud, Pete held the position of Senior Manager of Digital Loss Prevention at Dick’s Sporting Goods, where he put the e-commerce fraud department on the map when he and his team won the 2018 North American Fraud Awards. He is a prominent leader in the merchant risk management and fraud prevention community for both e-commerce and brick and mortar retail, serving as a mentor for the Merchant Risk Council and speaking at key industry events. He has a proven track record of achieving goals, implementing and managing strategies that drive profitability, lower costs and prevent fraud.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
When I first started my career, I worked at Kmart as what you would call “a detective” to identify and prevent internal and external theft. I worked my way through the ranks of retail loss prevention working for several companies early on, always looking to improve. At one point, alongside a small team, I was managing more than 300 stores for a mall-based toy retailer. I had a lot of fun doing that — I probably visited almost every mall on the east coast while working there.
My career in e-commerce fraud prevention really began after I joined Dick’s Sporting Goods to help build its investigations department. I had worked with the company in loss prevention for around five years when, in 2015, when I was promoted to the Manager of eCommerce fraud. This shift in responsibility meant I would be moving from millions in online revenue to over $1 billion in online revenue in a short period of time.
With no real online fraud experience, I realized early on that I needed to find a mentor as fast as possible. For the next year and a half, all I did was learn. I went to conferences, sat in on webinars and connected on LinkedIn with practically everyone in the industry. They were wonderful people who were willing to teach me, even though I knew little about the space. I learned quickly that loss prevention in brick and mortar and loss prevention online are two completely different disciplines, but I must say some of my brick and mortar skills did transfer over.
Fast forward a few years, and COVID-19 changed everything. In 2020, we saw a rapid increase in revenue, and with the enormous growth came many challenges, as well as seismic shifts in the e-commerce fraud landscape. In November 2021, I joined SpyCloud as the Director of Fraud and Identity. I am a student of the game and I will continue to keep learning and pushing myself to be the best I can.
Can you share the most interesting story that happened to you since you started your career?
The morning of my first official day at Sears Holdings as a district loss prevention manager, I was getting ready, excited to start the new job, when my wife came downstairs to tell me I wouldn’t be going to work that day. She was nine months pregnant at the time, and our daughter had other plans for us. Luckily, my new manager was almost as excited as we were.
Are you working on any new exciting projects now? How do you think that might help people?
Right now, everything feels new because of the massive impact the pandemic is having on fraud prevention and risk management. With the incredible pace of e-commerce growth, merchants are in a position to tolerate more fraud risk than ever before, which opened up new online customer bases and offered retailers insight into shopping behaviors they may have previously considered too risky. Merchants are learning that the more they know about their customers even the ones that might look a little risky on the outside — the more transactions they can approve with less friction — -the more top-line revenue they ultimately produce.
To that end, at SpyCloud, we recently launched the SpyCloud Identity Risk Engine, which provides actionable, predictive fraud risk assessments based on breach data and malware-stolen credentials recaptured from the criminal underground using human intelligence. It offers retailers and financial institutions the extra information they need to more accurately isolate fraudsters and facilitate the legitimate customer journey, increasing revenue and allowing more consumers to access online products that might have been closed off to them because of outdated, static fraud rules.
None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful, who helped get you to where you are? Can you share a story?
When I started to learn more about e-commerce fraud, I needed a mentor who I trusted, who would be willing to guide me, and who wouldn’t get annoyed when I called with what I’m certain were dumb questions. MRC, the Merchant Risk Council, opened up an entire community of mentors to me. Those incredible people, like Debbi Abood and Mike Jagusiak, just to mention a couple, didn’t know who I was, and I wasn’t a part of their world, but they agreed to mentor me and embraced me with open arms. I would never be where I am today without their guidance. I will also mention that at Dick’s Sporting Goods I had incredible support from my supervisor Jake Gillette and, from a technical standpoint, support from JP White and Eva Sciulli. Without their internal guidance, I would not be where I am today.
How have you used your success to bring goodness to the world?
I think it’s essential as a leader to give back to people that have supported you, and the gift that my mentors gave me is the knowledge that I could never have gained on my own.
It’s imperative to me to return the favor. I was part of MRC’s mentor program, and I am immensely proud of the work they do to help up-and-coming stars learn and grow just as I did. I recently resubmitted my application to continue to give back as a Mentor for the MRC. Fraud is an ever-evolving challenge, and every new generation of fraud prevention and risk management professionals faces the daunting task of building on the knowledge of those who came before them. As we enter the post-pandemic era, I hope to continue helping others the way my mentors helped me.
Ok super. Now let’s jump to the main questions of our interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?
At the beginning of the pandemic, we found it wasn’t just the mode of purchase but the demand that changed. People who were accustomed to going to the gym were ordering at-home workout equipment — at my previous organization, we had large runs on treadmills, ellipticals and 300-pound weight sets that you wouldn’t believe. We had to adjust to these changing demands quickly to meet the needs of our customers.
We also saw a new base of customers who were used to purchasing products from brick and mortar stores pivot to shopping online. From a fraud perspective, we found that a lot of our existing fraud rules didn’t apply to the behavior of people who were new to e-commerce. For example, older generations who were used to coming in to make a purchase might have their kids or their grandkids help them with an online transaction, resulting in different billing and shipping addresses. Normally, that may be a sign of fraud, but now, it’s a sign of changing consumer behavior. To accommodate the spike in e-commerce, we introduced more flexibility into our approach to fraud.
The supply chain crisis is another outgrowth of the pandemic. Can you share a few examples of what retailers are doing to pivot because of the bottlenecks caused by the supply chain crisis?
The resale bottleneck was one of the many disruptions in the supply chain we didn’t anticipate, and it’s one of the least discussed. The demand for products was so high that we saw an influx of resellers who were buying high-demand products in bulk and reselling them for profit. When we became aware of that behavior, we had to adjust our strategy.
How do you think we should reimagine our supply chain to prevent this from happening again in the future?
One of the major lessons of the pandemic was the need for greater flexibility and resilience in the flow of transaction and supply. From a fraud and e-commerce perspective, some of our early challenges stemmed from relying on assumptions that held before the pandemic but no longer applied in a changing world. To avoid the kinds of bottlenecks we encountered moving forward, retailers must monitor trends in consumer behaviors and continuously adjust processes and protocols in response. For example, by leveraging recaptured data from the criminal underground, companies can have a better insight into criminal workings and can help thwart fraud much earlier in the cycle, all with a seamless customer experience.
In your opinion, will retail stores or malls continue to exist? How would you articulate the role of physical retail spaces at a time when online commerce platforms like Amazon Prime or Instacart can deliver the same day or the next day?
There’s no doubt e-commerce has seen tremendous growth, especially coming out of the pandemic. That said, I believe there’s always going to be a place for the brick-and-mortar store. Plenty of customers still prefers to go to a physical location to see purchases before they buy, especially for items that are expensive, like electronics, or personalized, like sports gear. A physical retail store also offers the benefit of an omnichannel experience, where customers can browse across departments and complete returns and exchanges in one place, immediately, without having to wait for shipping. Ultimately, it all comes down to the needs of the customer. Brick and mortar retail can offer convenience and value in some cases, but not all — just like online commerce platforms.
Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise to retail companies and e-commerce companies, for them to be successful in the face of such strong competition?
Traditionally, fraud prevention is viewed in opposition to revenue. The pandemic showed us that a clear understanding and management of fraud risk can unlock new revenue streams and allow retailers to reach new customer bases. While we saw an increase in fraud over the last two years, it was accompanied by an even more impressive surge in e-commerce revenue.
Retailers calibrated their tolerance of fraud risk to move more fluidly with changing contexts and, as a result, started approving a greater diversity of transactions. The change in strategy resulted in more fraud, but it was a manageable increase. Moreover, it also produced exponential growth in revenue. As we learned early in the pandemic, many of our static assumptions around consumer behavior are outdated and are limiting e-commerce retailers’ access to new markets.
Retailers who can tailor their fraud stacks to create more responsive, contextualized risk management protocols will be well-positioned to share in the e-commerce boom. Preventing fraud doesn’t have to limit revenue anymore. Instead, it can point retailers to customers they might have otherwise missed.
Based on your experience and success, what are the five most important things one should know in order to create a fantastic retail experience that keeps bringing customers back for more? Please share a story or an example for each.
- Know your customer. Knowing your customer means continuously learning about your customer, and adjusting based on new information. At the beginning of the pandemic, we saw a massive influx of new customers, but we also had to retain our existing customer base. Our priority was getting new and existing customers access to the high-demand products they were looking for, which meant preventing resellers from stockpiling and selling products at a huge markup.
- Know your audience. When you’re working to grow and keep past customers coming back, you need to promote without creating noise pollution. If I get five emails a day from a company, all of them are going in my spam folder. If I get one email, and it aligns with what I value and meets my needs, I’m a lot more likely to engage with it.
- Deliver value. You need to deliver products in a timely manner. The reality everybody is trying to meet the same-day or next-day standard. That’s not going to be achievable for all retailers, but at the same time, in today’s market, making customers wait for seven to ten days is going to negatively impact the customer experience more heavily by comparison.
- If something goes wrong, be accountable to the customer. That doesn’t just mean responding to problems quickly. It also means staying in stock and finding ways to meet the demand. Especially after the past couple of years, staying flexible and agile has made the difference between the retailers that have found ways to grow and thrive and the ones that have struggled.
- Question your assumptions. Customers will keep changing, and to be successful, retailers need to grow and evolve with them. In the fraud prevention and risk management space, we’ve learned that taking a second look at what we think we know allows us to approve transactions and reach customers we might otherwise have missed. In today’s competitive market, reaching new revenue streams is an edge company can’t afford to lose out on.
Thank you for all of that. We are nearly done. Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I’m a blue-collar guy, and I know where I came from. I was able to rise in retail and tech because I had the good fortune of being able to rely on some fantastic mentors who helped me learn and grow in a new field. I have loved being able to give back through mentorship, helping others from all walks of life bring diverse experiences and backgrounds to the industry. I’d like to encourage mentorship across sectors and industries, especially in tech and fraud prevention, to help strengthen our work and empower the next generation of leaders.
How can our readers further follow your work?
I’m looking forward to attending MRC Vegas 2022 from March 7 to 10, where I’ll be moderating a panel with my colleagues iHerb Senior Director of Fraud Prevention Jordan Harris, JD Sports Finish Line Head of eCommerce Fraud and Risk Management Dajana Gajic-Fisic and Bass Pro Shops Senior Manager for Fraud and Investigations Keith Thompson. I publish periodically on SpyCloud’s blog and readers can also find me on LinkedIn.
This was very inspiring. Thank you so much for joining us!
Pete Barker Of SpyCloud On The Supply Chain and The Future Of Retail was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.