Most e-commerce stores run their stores using Shopify. It is a popular online platform that is easy to use and helps you grow your business. But even the most secured e-commerce store owners can be the victim of online fraud. Indeed, dealing with fraudulent orders is a part of the risk, but knowing how to identify them can help your business prevent losses. Take a look at some tips to forbid future frauds on Shopify.
Types of fraud
Before we get into the details of the tips, it is crucial to understand the types of fraud. Chargeback fraud and card-testing fraud are two main types of online fraud. Chargeback fraud happens when the purchases are reported as not delivered, and then the money is charged back to the Shopify store owners by the credit card company. Card-testing fraud occurs when hackers have a list of stolen card numbers, probably from the dark web. They then try one purchase after another from an online store with different numbers until they find a card number that works. This card is then used to make fraudulent purchases. Shopify store owners should also be aware of employee fraud, refund fraud, discount abuse, vendor theft, cash register tampering, and wardrobing frauds.
Tips to investigate suspicious transactions
Check the IP address
One of the key indicators of detecting potential fraud is by verifying the IP address. Check if the customer’s IP address is located in the same area where they claim to be. If not, then get in touch with the customer to verify the authenticity of the purchase.
Verify orders by calling the purchaser
This may not be possible if you receive a large number of orders daily, but if you find a growing trend of chargeback fraud, it may be a good idea to check if the phone number belongs to the area code mentioned in the billing address. Most fraudulent purchasers use invalid numbers. Call and verify the details. If they answer the phone, ask them simple questions like their address, phone number, email ID, and name. If they are struggling to give you basic information for verification, it may be a red flag.
Monitor high-value orders
Most fraudulent customers place orders of high value. Before processing the order, verify all the details. Check if you have received multiple orders with different billing addresses but the same shipping address. If something feels strange, look up the address on Google Maps or send the shipment with a tracking number that requires a signature for delivery. Run a general search for their email ID on a search engine. This will tell you if the email ID was used in other documented fraud orders. You could find links on social media or other information that have links to potential fraud customers.
Look for Shopify fraud analysis indicators
Shopify has an in-built fraud analysis tool that indicates if the order could be a fraud. This feature checks the following: the Card Verification Value (CVV) is correct; the billing address matches the credit card’s registered address; the IP address isn’t a web proxy, and the shipping address is 50 km away from the IP address. Based on this information, Shopify will categorize orders in two colors. Green determines that the order is legitimate, and red suggests fraudulent orders. Gray indicators provide useful information about the order. However, Shopify does mention the percentage of accuracy of this feature. Browse the Fraud Analysis section mentioned on Shopify’s website for more information. Store owners can additionally install third-party apps like Signifyd or Fraud Scanner to prevent fraud. Bump up your payment security at the checkout by using a CAPTCHA to differentiate between bot and human.
