Here’s How ButcherBox Is Fighting Fraud Throughout Its Subscription Business

Brought to you by WBR Insights

Over the last few years, a new kind of business model has emerged and become incredibly popular among customers. Once the domain of digital services such as television, subscription-based retail has become a serious contender in the ecommerce world.

The concept couldn’t be simpler — customers pay a set amount every month and receive a range of products at regular intervals. Some subscription offerings are based entirely around the mystery box concept — where customers sign up to receive a surprise selection of items each month based around a theme — while others send out the same products each time — such as razors. Whatever the exact nature of the model — the customer normally saves money compared to if they bought the same products the old-fashioned way.

Protein provider and industry disruptor, Butcher Box has been making serious waves in the subscription business and has also been devoting itself to fighting fraud in the sector.

Butcher Box

Butcher Box has seen amazing success, with its meat box subscription boxes starting at $129 and delivering to 48 states. The innovative brand did not initially place much stock in advanced data and analytics, but it has been forced to grow and adapt to gain insights into its customers and grow revenue.

However, this growth in customer volume and revenue does come with an increased chance of fraudulent activity occurring. The subscription business is particularly vulnerable to certain types of fraud — for example, where criminals use stolen credit cards to have packages sent to random addresses. While the cards themselves get shut down fairly quickly, it does allow fraudsters to take advantage of Butcher Box’s affiliate program, which rewards existing customers with $15 commission for each new subscriber they bring into the fold.

“We ended up shipping out hundreds of boxes before we caught on and paid the fraudsters commissions when they were just running stolen credit cards,” said Butcher Box founder and CEO, Mike Salguero. “We’re not talking about small packages either. It’s a lot of money and very expensive if we don’t catch onto it and solve it immediately. Unfortunately, fraud happens — It’s an arms race, and it’s tough to stay in front of it.”

To help prevent this from happening, Butcher Box implemented a brand-new security system that would flag suspicious payments as they happened and pass them to a human operator to investigate. If a purchase is made where the billing and shipping addresses don’t match, for example, the system will flag it. Having a pair of human eyes involved is of utmost importance, as there are plenty of legitimate reasons for having a package delivered to an alternative address.

Butcher Box is also making its data more secure by partnering with Stripe. Through the partnership, payments can be processed without ever storing sensitive customer information on Butcher Box’s platform.

Combatting Fraud

Another way Butcher Box is helping to fight fraud is through the way it sources its products. We live in an age where businesses operating in the industry need to make sure all animal products are sourced in an ethical, sustainable, and responsible manner — something we are seeing increasing demand for from customers.

Butcher Box wanted to start offering wild-caught sea scallops as part of its subscription offering but was concerned about how to make sure they were traceable to local, ethical sources.

“I knew that if I did something that was local, it had to either be haddock or cod or scallops,” said Director of Procurement for Butcher Box, Michael Billing. “I mean, so many of the scallops come in right here in New Bedford, so I figured that made sense. Plus, from my prior life, I knew that with scallops … not many people know what a real, natural, never-enhanced product tastes like. Especially if you live in the Midwest, unless you go to a Whole Foods or Costco or one of the people that are always on the high end of it —  I know supermarkets don’t play in this area very much, the scallops are all enhanced.”

To solve this issue, Butcher Box partnered with Legit Fish, which leverages technology and government harvest data to trace seafood products from the boat to the dinner plate. Each Legit Fish-traced product’s packaging displaying a comprehensive label and scannable QR-code that details the species, vessel names, fishing area, and landing port where the seafood came ashore.

“I think transparency is incredibly important,” added Billings. “And with us being a claims-based company, I think it’s even more important. It adds even more pressure on us to make sure we do it right and make sure we tell people everything they should know about their product. The industry, all over, just needs some real transparency. I think in the long run, it’s going to increase the quality, I hope, for the industry.”

Final Thoughts

It’s fantastic to see a brand such as Butcher Box taking its responsibilities at both ends of the business so seriously. Combatting fraud from the customer and procurement sides will help create a more sustainable and profitable industry for all.

For more insights, join us at eTail Boston 2020, taking place in August at The Sheraton, Boston.

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