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10 signs of a fraudulent order

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There are two types of chargeback fraud for businesses accepting card payments,

  • True Fraud – When stolen credit card information is used to process a transaction that the cardholder didn’t authorise.
  • Friendly Fraud – When a customer attempts to get a refund for something they actually purchased by claiming that they didn’t buy it.

The leading cause of chargebacks is true fraud, but friendly fraud is a growing problem. It’s important for merchants to try to identify fraudulent orders before they are processed to be able to react quickly and effectively so that further losses don’t occur.

 

So what can you look out for? Here are ten signs an order may be fraudulent

  1. Unusually large orders, by volume or price.
  2. Rush orders, where time would be an advantage
  3. Unusual use of international shipping addresses or cards
  4. A sequence of small transactions made over a period of time with the same or similar card details.
  5. Different orders made with the same card or account number but with different shipping addresses. Or orders made with different card numbers but with the same shipping address.
  6. Several orders made with different card or account details but with the same IP address. Fraudsters may try several cards until they find one that works so look for failed transactions as well.
  7. An order is attempted from an IP address in a high-risk country (Russia, Malaysia, Ghana), an IP address that doesn’t match the billing or shipping address, or a cloaked IP address.
  8. Obviously fake phone numbers or email addresses are used to place orders (e.g. 12345 666 777)
  9. Inconsistencies with customer information across multiple purchases. Different billing names, phone numbers, or email addresses.
  10. Any transaction that attempts to overcharge the card for more than the transaction amount and then pay out a third party by a different payment (cash, money order, cheque) is likely fraud.

Chargebacks can not only jeopardise your selling privileges, but the costs and lost sales can add up quickly, damaging your profits if you as a merchant aren’t trying to prevent them. Being aware of what to look out for can save you money in the long term.

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