Fraud Detection for Microsoft Word: Signals, Risk Scoring and Enforcement

You are interviewing for a product manager role and get a technical design question: Microsoft wants a system that can detect when Microsoft Word is being used fraudulently. Walk through the design: what you would treat as fraud, which signals the system would collect, how it would decide that a given use is fraudulent, and what should happen when it does. ```hint Define fraud first "Fraud" could describe several different behaviors around a word processor that ships as desktop, web and mobile apps under licenses and subscriptions. Each one leaves a different trace, so separate them before choosing signals. ``` ### Clarifying Questions - Which kind of fraud is in scope: using Word without a valid license (cracked installs, leaked or resold product keys), breaking subscription terms (selling seats of a shared plan, cycling free trials), or using Word to produce harmful documents such as forgeries or files with malicious macros? - Does the system need to cover the desktop apps, Word on the web and mobile, and should consumer and business customers be handled the same way? - May the system look at document contents, or only at license, device, account and payment metadata? - What actions can it take (warnings, reduced functionality, revoking a key), and how costly is wrongly flagging a paying customer compared with missing a fraudster? ### What a Strong Answer Covers - A clear breakdown of what fraud means for Word and a reasoned choice of which type to tackle first. - Detection signals tied to each fraud type, and how the system turns signals into a decision (hard rules, a learned risk score, or both) and where human review fits. - The system's shape: event collection, scoring at activation or sign-in versus batch analysis, and labels that feed back into detection. - Graduated enforcement that protects legitimate customers, with an appeal path and privacy limits. - Success metrics and guardrails, such as flag precision, recovered revenue and complaints from paying customers. ### Follow-up Questions - A company's employees activate hundreds of copies from one office network in a single week. How does your system avoid treating that as key abuse? - Fraudsters change tactics once you start blocking them. Where do new labels come from, and how do you keep detection current? - Would you block a cracked copy outright or try to convert its user to a paid plan, and how would you decide?