Introduction

As a marketplace-based, consumer-facing app, Uber encounters a multitude of sources of fraud across its platform. In one of the most common cases of fraud, bad actors use various methods to attempt to bypass payments for Uber rides, Eats orders, and other services, like Uber for Business. When this happens, failed transactions can occur, incurring losses that affect the drivers and businesses operating on Uber.

To account for the serious financial implications of payment fraud, risk management is prioritized at Uber. Reflecting the risk solution landscape within the overall tech industry, our engineers have developed complex solutions to achieve the following: 

Risk Challenges

Risk challenges are experiences in which the user is asked to complete a certain task or process, often to verify the legitimacy of their identity or payment method. You have likely encountered a risk challenge before, and not just on the Uber app. A common one is to enter the CVV of a credit card when making a credit card transaction. 

One of the main desired outcomes of risk challenges is to effectively catch bad actors. This point is self-evident: a group that encounters risk challenges should have lower rates of fraud in comparison to a control group. However, protecting against fraud is not as simple as introducing risk challenges to everyone. The nature of risk challenges is highly individualized. Given the wide scope of Uber’s users, products, and geographies, risk challenges encountered on Uber will vary from user to user. Uber applies different risk challenges to different stages of the user journey, and users in different regions of the world may encounter different risk challenges. Let us consider just one risk challenge implemented in the Uber app: penny drop verification.

Penny Drop Verification

Consider the scenario where Uber receives a ride request from a user who does not seem to be the owner of the debit or credit being used on the app. Based on the behavior and data of this Uber account, it seems there is a very high probability that this particular user has stolen a card that they claim to own and plan to use for the ride. 

In the past, Uber would detect such users who were highly likely to be fraudsters and immediately prevent them from continuing to significantly engage with the app by employing certain strict actions. In the scenario described, the ride request would be declined, and the associated payment and/or user would be restricted in some cases.

On the surface level, this might seem effective in terms of avoiding payment fraud. While this strategy of strict actioning was in place, however, it became evident that it was not ideal for potential false positive users. Uber users whose access was restricted are required to contact customer service to resolve their status, which is often a resource-intensive process. 

Penny drop verification was introduced in the Uber app as a user-friendly method for individuals who might have previously been restricted from using the app to instead have a chance to prove ownership of their payment method. In this challenge, a user is asked to confirm to Uber two small, random authorization hold amounts before they expire within a given timeframe. Successful completion indicates that a user is likely the legit cardholder and not a fraudster. 

Technical Overview

The penny drop verification challenge was implemented with the goal of being both an effective and intuitive method of fraud mitigation for users using a credit or debit card as their payment method. We can summarize how we achieved this through the following design principles, which apply to not just the penny drop verification challenge, but any other good risk challenge: 

The following screens illustrate a happy path for a legitimate user that is thrown a new penny drop verification challenge.

As illustrated, the challenge is integrated into the mobile user experience in a way that should not majorly interfere with the user’s intended primary action–in this case, requesting a ride–through clear instructions and simplistic actions. At the same time, “skipping” the challenge is not possible, as the user who is thrown the challenge is required to complete it. Even if the user exits out of an initiated challenge in the user interface, the status of the challenge will still be active, and the user will be continually prompted to complete it if they try to resume relevant actions. 

Triggering Flows

As aforementioned, certain risk challenges are designed for certain user journey flows on the Uber app. Two main flows where the penny drop verification challenge may be displayed:

The challenge is not raised for every user at every occurrence of these flows. Rather, in the case that one of these two flows is initiated, downstream services are called on to fetch user-related features and to run risk rules in Mastermind. The rule results may indicate that further risk assessment is necessary, particularly to verify that the user is the owner of a specific payment method. If this occurs, backend services send an error code to the mobile side such that the user encounters mobile screens responsible for initiating the penny drop verification challenge. 

User Consent

After the penny drop verification challenge is deemed necessary during a triggering flow, then a modal is shown to allow the user to choose to verify their selected card. In some cases, the user may have already consented to the challenge, but has exited before successfully completing the challenge, so they must re-consent.

If the user chooses to switch to another payment method, they may not be asked for further verification. This is because the action of presenting a risk challenge depends on a user’s specific payment method. Often, an Uber user adds more than one card to their account, and they may or may not be the legitimate owner of any number of them. Different payment profiles of the same user can have different challenge statuses.

Once a user clicks “Verify card,” backend processes check various conditions to determine what client-side screen to show to the user in the remainder of the challenge flow. It is first necessary to confirm that data related to the selected payment method, like its UUID and the status of the penny drop verification challenge, has been saved in Docstore, Uber’s backend database. If the card is entirely new, then relevant data about the card is written to Docstore for the first time.

Send Authorizations

On a screen that provides more information about the risk challenge, the user is prompted to send authorization holds. In the overall context of electronic transactions and payments, authorization holds are temporary holds placed on a certain amount of funds; they are often used to determine whether a user has enough money to complete a transaction, and thus whether Uber is able to collect a payment from that user. 

After the user clicks “Send authorization holds,” two small monetary amounts are issued to the user’s designated bank account using the authorization hold protocol. To initiate this process, an internal payment operation service makes a request to a specialized “payment grant” service to create two distinct grants. This is done by supplying two randomly generated amounts to be held, as well as a specified void duration.

The payment grant service interacts with a payment gateway or processor, which contacts the user’s bank or card issuer to formally request temporary authorization holds to be placed on the user’s payment account, in the specified amount. If the specified void duration lapses and the fund holds are released, and the user has not successfully verified the amounts to complete the challenge, then the user will have to re-send the authorization holds.

Amount Verification

To successfully complete the penny drop challenge, users are required to review their bank statements and accurately enter the exact amounts of the authorization holds within the Uber app. These entered amounts are then subject to verification.

Throughout this procedure, the user’s challenge status is updated within Docstore, Uber’s backend database. If the user does not successfully verify the authorization hold amounts within a certain number of attempts, they will have failed the challenge. In this case, their access to the Uber app will be restricted because we have strong indications that they are not the owner of the payment method. By contrast, if the user does successfully complete the challenge, they can seamlessly proceed with their intended actions that they had initiated before being thrown the challenge. 

Conclusion

We are continually fine-tuning the user experience of the penny drop verification challenge in a way that effectively mitigates risk without creating too much friction in the user experience. Through analysis of metrics like success rates and churn rates, we continually act on insights into how users are interacting with the challenges that are thrown to them. 

Penny drop verification is just one type of risk challenge integrated in the Uber app. Other challenges involve varying levels of difficulty. Based on what we understand of a given user and their intentions, one challenge may be considered better to use than another. Overall, risk challenges have been integral in our ongoing efforts to enhance security and user experiences on the Uber app. Its implementation has not only effectively served as a safeguard against fraud, but has also led to smoother user experiences, thus expediting onboarding for specialized offerings such as Uber for Business.

Acknowledgements

Thank you to the Spender Risk Team for sharing their expertise about a range of interesting engineering challenges related to fraud throughout my internship, including risk challenges. 

Special thanks to Diganta Sarkar, Qixiong Liu, and Susie Peng for providing insights relevant to this blog, as well as Neel Mouleeswaran and You Xu for supporting my internship and growth as a software engineer.