4 Common Elements of Fraudulent Orders

Fraud can follow an online merchant around for a long time. It’s a huge hassle to correct and an even bigger drain on your pocketbook.

Fortunately for online storeowners, today’s technology makes fraud easier to identify. We’re now equipped with tools that simplify the process of identifying and outing a fraudster. Some of these tools also make it easier to share your experience with other merchants in your community.

Here are four elements you should look for in a fraudulent order. (TIP: A fraudster typically fulfills more than one of these.)

#1, A foreign or proxy IP address could belong to a fraudster.

IP addresses are major identifiers for Internet users. These days, they can help marketers locate where in the world their customers come from, among other benefits.

Because IP addresses are easy to trace, a fraudster usually makes sure his is invisible. By using a proxy IP address, a thief can block you from identifying his location.

In some cases, foreign IP addresses are equally as dangerous. It’s too difficult to take legal action against a thief in Europe, for instance, when you’re based in North America.

Location plays a role in fraud identification in other ways, too.

#2, Billing addresses and shipping addresses that don’t match are suspect.

Not every shopper who comes through your store will have matching billing and shipping addresses. In many situations, this happens when a customer sends a gift. In others, it could be that your shopper has more than one address.

The truth is that there are plenty of reasons why a shopper might give different addresses. But if the purchase fulfills other potential fraud conditions, it might be worth a closer look.

Why a fraudster might use different billing and shipping addresses is pretty simple to figure out. Just make sure you do your due diligence before you cancel a purchase.

One final location-specific data point is crucial for fraud detection.

#3, Phone numbers with area codes that differ from the shipping address.

For many of the same reasons as above, this is another data point that might identify a fraudulent purchase.

Online identity theft is a regular occurrence. A fraudster could very easily pull credit card and address information. Then, he might give a fake phone number. If you’re worried that they don’t match, it’s usually a good idea to look at some of the other data points in this list. As always, you’ll want to build a comprehensive case before you decide to block a purchase.

#4, Above-average order amounts from first-time customers.

Large orders can be exciting for an online store. But they aren’t very likely, especially with new customers who want to try out your store before they make any big purchases.

A large order, however, can be a sign of a fraudster trying to get a one-time purchase in before the victim cancels his credit card or a carding attempt. Today’s real-time alert system for credit card fraud helps consumers identify issues quicker. As a result, fraudsters typically understand that they get one chance to use the card, so they’ll maximize that purchase.


Conduct safe business.

As always, make sure you’ve identified multiple data points that might be fraud before you block a purchase. You don’t want to risk alienating a customer. But you do want to protect your store.


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