Top 10 Red Flags to Prevent Online Credit Fraud for Retailers

cardsShut Down the Scammers – Top 10 Red Flags

It takes a brazen person to walk into your place of business and steal something off the shelf or give you a credit card for payment that is not theirs. The online space is different. It’s impersonal, faceless with many dark corners to lurk and hide in. Retailers need to take many precautions to prevent themselves from being a victim of online fraud.  It is a headache you just don’t need to deal with!

The first thing to consider is who you will partner with as your secure credit card processor. Be sure to use a reputable company that has advanced fraud tools like the ones offered by PsiGate. These companies will do the legwork upfront to screen the purchase and throw up some red flags if something appears wrong or does not match their parameters. Credit card numbers will also remain confidential so you do not have to worry about the security of those numbers in your files.

Don’t fully automate your online system. A human element to processing orders can help you identify ones that should be considered “red flags” as many fraudulent orders can still get through the screens put up by your credit card processor. At the very least, your system should be designed to spot these and flag them for human review before they are processed.

Top 10 Red Flags for Fraudulent Online Credit Card Purchases:

  1. Customers who ask to ship to a unit, suite or box number. Often the bill to address will be different than the ship to address. A simple search for this address on google maps can often tell you if this address is a legitimate business, apartment/condo or if it is just a storage unit. Never ship to a storage unit unless you know the individual.
  2. Customers who try to order through email vs. regular online processor. Never take credit cards through email.
  3. High ticket items like electronics (or in our case also knives and camping gear) that are in large quantities.
  4. Orders shipped to the United States or other international destinations represent over 90% of our flagged orders.
  5. Phone numbers that do not work. If you have any concern at all, dial the phone number attached to the order to see if you get a real person or not. Nine times out of ten the phone number does not work or it does not belong to the individual listed on the order. Sometimes it does and this is the point they will thank you for verifying the purchase first before charging their credit card.
  6. The same customer orders the same product again in large quantities. We got burned on an order like this once as all seemed legit and even got a live person when calling the phone number
  7. Odd combination of products on your order. From our experience, there is a normal pattern to the types of orders placed and stays within a limited number of categories. This is not always true if you have a great website that is easy to browse but something to consider especially if you notice any of the other red flags present.
  8. There are multiple orders in the system from one customer, all declined except one – using multiple cards. They are going through a list of numbers trying to find one that works.
  9. The email address is generic (random and/or with no actual name) from a service like Gmail, Hotmail or Yahoo.
  10. The IP result (location where the purchase is being made) does not match the geographical location of the billing or shipping address used. It is entirely possible this could be a valid order as people travel a lot and still shop but is important to consider.

If one or more of these red flags show up in an order we will always review it further before processing the order. If you have any doubt at all, you have that “gut” feeling and you just can’t feel confident about the validity of the purchase – it might be worth just discarding the order.

I would not necessarily advise this but we do respond to all discarded orders with a simple generic message that says something along the lines of “We do not have the inventory to fill this order at this time” or “this order cannot be shipped to this address”, etc. We will never include any personal names or addresses in this email as we are never are entirely sure where it is going. If it was a valid order in the first place, we would likely get a response to this email.

Since writing this, Moneris has just put out a e-booklet on how to prevent fraud in your store which is worth a read – Moneris Fraud Prevention

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