Funding Approval: Fraud Detection Initiative

Board Memo · Office of the CFO · 6 February 2026

Initiative: Fraud Detection Budget: $650,000

To: Executive Leadership Team
From: David Chen, Chief Financial Officer
Re: Board approval of funding for payment-fraud and returns-fraud detection

The Board, at its meeting of 4 February 2026, approved a capital and operating allocation of $650,000 for the 2026 financial year to stand up a fraud-detection capability across RetailFlow's online and in-store channels. This memo confirms the mandate and the success measures agreed.

Why now

With 35% of our $150M revenue now transacting online, our exposure to card-not-present fraud and to fraudulent returns has grown faster than our controls. Chargeback volumes rose materially over FY25, and our manual review process (described in the current handling policy) is straining under load and is inconsistent between the online team and store managers.

Objectives

Reduce card-not-present chargebacks by at least 40% within 12 months of go-live.
Reduce confirmed fraudulent returns and refund abuse by at least 30%.
Do so without a material increase in legitimate customers being wrongly declined or held for review.

Note: The Board was explicit that customer experience is a hard constraint, not a nice-to-have. A solution that cuts losses but turns away good customers will not be judged a success.

Budget envelope

Item	Allocation
Vendor selection & integration	$280,000
First-year licensing / transaction fees (provision)	$220,000
Internal delivery, tuning & oversight	$110,000
Contingency	$40,000
Total	$650,000

Governance

Marcus Kim (CIO) is accountable sponsor. Dr. Priya Sharma (Head of Data & Analytics) will advise on the build-versus-buy decision and own threshold and oversight design. Tom Walsh (Customer Service Manager) is to be consulted on any change that affects how flagged orders reach customers. A go/no-go review is scheduled for end of Q2 2026.

David Chen, Chief Financial Officer