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Online retailer Ocado unveils AI fraud detection system

Ocado Technology - the technology division of online retailer Ocado - has developed what it claims is the world's first artificial intelligence-based fraud detection system for online grocery purchases.

"As the world’s largest online only supermarket, our systems handle millions of events every minute as our customers navigate our website and apps, add items to their trolleys, choose delivery slots, and check out their orders," it says in a blog post.

"These interactions result in petabytes of data collecting in our data lake stored in Google Cloud. One challenge facing any retailer operating online is isolating and recognizing the rare incidents classified as fraud in a smart and efficient way."

Online fraud typically covers any instance where an order is delivered but not paid for, says the retailer. Fraud can happen as a result of a genuine mistake (a customer entering the wrong personal details or using an expired card accidentally) but, occasionally, it can also be the result of malicious intent. If left unchecked, fraud can propagate to other systems and companies and affect customer service.

"Traditionally, fraud detection agents are employed to make judgement calls on whether they think a certain interaction is likely to be fraud or not," says the blog. "Decisions are based largely on intuition and can leave companies in a position of playing a cat and mouse game with fraudsters."

The new system relies on an advanced machine learning (ML) algorithm that it says is more capable of quickly detecting fraud patterns compared to humans and, as as fraudsters change their tactics, can learn the new patterns much quicker. It predicts and recognises these incidents among millions of other normal events using data collected from past orders, including cases of fraud.

The system has been integrated into Ocado Smart Platform (OSP), an e-commerce business that has been licensed by multiple grocers worldwide, including Morrisons in the UK, Groupe Casino in France, and Sobeys in Canada.

The model has already achieved significant success, improving Ocado’s precision of detecting fraud by a factor of 15.


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