It’s mid-November already, and online merchants are gearing up for what promises to be the biggest online shopping season ever. As increasing numbers of people shop online, merchants must be ever-more vigilant about preventing and detecting order fraud. Fraudsters are sophisticated, and the number of fraudulent orders rises every year. Going over-limit on credit card chargebacks and refunds can destroy a merchant’s ability to accept credit cards, which can be the death of an otherwise honest business. Fraud costs you not only money but time, so it pays to protect yourself. You probably can’t eliminate all fraud, but these steps can put a dent in it.
The first line of defense is identifying suspicious orders before you fill them:
• the order contains multiple requests for the same high-ticket item or is for many of the same item that is easy to resell
• foreign shipping address but U.S. billing address
• the IP address doesn’t match the billing address
• ZIP code and address don’t match (an AVS, Address Verification System, can determine this)
• the order is much larger than your typical order
• the order is missing information
If just one of these problems is present, there may be no concern, but if more than one of these red flags present, take some additional action. For instance, a large order for many of the same expensive items, from a foreign address, with overnight shipping would be a big red flag.
What you can do:
If you have the full credit card number, call the bank and verify that the card number matches the billing address. If you have a phone number for the order, call it just to make sure it isn’t a disconnected number. Assuming you did reach an actual person, a fraudster is not going to admit to being a fraudster! However, you can call suspicious orders and verify details by phone. Ask the customer if they really intended to buy 100 Swarovski crystal-encrusted napkin rings or whatever it is. Most legitimate customers will be thrilled you’re taking the extra step as a security measure. This protects them from unauthorized charges as well as yourself.
You can Google the name, address, or phone number that you received with the order and see what you can find out. Keep in mind that people move, and online records may be out of date. Call the credit card company and verify that the billing address, name on card, and CVV number are correct.
If none of these steps reassures you that the order is legitimate, you may simply cancel it. If you can, send the customer an email saying that you were unable to verify their credit card. Legitimate customers will almost always follow through to see what the problem is while a scammer won’t.
If you aren’t currently using an Address Verification Service (AVS) and Card Code Verification (CVV/CVC2/CID), begin using it. These tools detect irregularities in a cardholder’s information that can give you a heads up that this order needs more attention.
Scammers know the clock is ticking on stolen credit cards, so they request overnight or express shipping. Coupled with an extremely large order, incomplete order information, or some other issue, call the phone number to say that there is a delay in processing the order. You might be able to tell from their response whether or not the order is legitimate.
Call large orders and tell them that you require signature upon delivery. If they refuse, consider voiding the order.
MightyMerchant’s article, “Fraud Prevention-Just The Facts,” has many more tips on how to identify suspicious orders and outlines steps to take if you receive an order that you believe is suspicious. Arm yourself with the tools to identify suspicious orders now, and keep fraud to a minimum on your site as the holiday shopping season enters full swing.
