How to Identify and Stop Fraudulent Orders


Setting up an online store will broaden your customer base and allow you to sell both digital and physical products. Unfortunately, even as the Internet offers invaluable opportunities to business owners, it also gives criminals more opportunity to commit fraud.

A common and costly type of fraud is the use of a stolen credit card number to make purchases. To minimize the risk of these fraudulent orders, consider the following advice.

Collect and review addresses

The checkout system for your online store should record customers’ IP addresses and ask them to input their shipping and billing addresses. Red flags for fraud include strange discrepancies between the addresses; for instance, each might be located in a different country. Another possibility is that the customer supplied you with a false address; the billing address may point to an empty lot or a nonexistent street, and the zip code may not match up with the corresponding city. Addresses from countries associated with fraud, such as Nigeria, also require more careful scrutiny.

Although it is possible to check shipping and billing addresses manually by using various online tools, you would save time by relying on reputable software to run these checks for you. Make sure to get address verification and geolocation software, which may be offered as part of a larger eCommerce builder package.

Require the Card Security Code (CSC)

In addition to the credit card number, customers should input the CSC, which is found on each card as a short numerical code. This measure will block purchases from criminals who have stolen another person's credit card number without managing to find out the CSC.

Use email and/or phone verification

With email verification, customers are required to respond to an email to confirm their purchase and finalize the charge on their card. This safeguard puts a stumbling block in the path of criminals who have multiple fake email accounts that they never check. Criminals who submit another person's legitimate email address would also get thwarted.

Another measure you might want to implement is to call customers by phone, especially if their order has raised some red flags. By calling customers, you can check if they have given you their own phone number and confirm other details about the transaction.

Keep meticulous customer records

By maintaining detailed records of all orders, you can keep track of problematic customers, detect patterns of fraud, and have evidence to supply to credit card companies. If you report suspicious behaviors to credit card companies, they will usually put a temporary freeze on a card and contact the legitimate card owner; this prevents the spread of fraud by blocking all attempted purchases made with a card that is stolen.

Good eCommerce builders have tools that compile detailed customer records and alert you about suspicious behaviors or false information. When using your online store, customers with a good track record might enjoy a more streamlined checkout process. Other customers would be flagged for additional verification or perhaps blacklisted and prevented from making future purchases.

Focus on prevention

There isn't one foolproof method for stopping fraudulent orders. To minimize the risk of getting victimized, use reliable software and implement multiple preventative measures. The key is to stop fraudulent orders at the earliest stages, before a charge is made to a stolen card. Prosecuting Internet crime is difficult, especially if the criminals are based in another country. Although preventative safeguards may sometimes cast suspicion on legitimate customers, in the long run they will save you from monetary loss and legal hassles.

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