Along with the convenience that e-commerce gives, consumers come to the people manipulating it and cheating the system to profit. Fraudulent purchases also became easier with online shopping websites and apps, victimizing merchants and shoppers. It’s a threat that lurks around e-commerce that can catch anybody off-guard on any given day.
For e-commerce merchants, it’s a unique challenge they face once they enter the fray of selling their goods online. E-commerce fraud causes many problems for merchants, not just in terms of revenue. It can also cause a loss of customer confidence and products, which is more serious for merchants selling high-value physical goods.
The biggest challenge in the battle against fraud is preventing it from happening because it’s meant to be hidden. That’s why you have to know what you can do to avoid being a victim. Here are some useful tips you can learn to prevent fraudulent online purchases.
Know the red flags
Because a fraudulent purchase looks normal, merchants get deceived easily. Instead, it leads to the worst-case scenario when they fail to handle the situation properly. They lose their customer’s trust, and they take steps to file a class action lawsuit.
When you know the signs of a fraudulent transaction, you can think of ways to stop the worse from happening. Here are the things you need to watch out for as an online merchant:
- Purchase from an unusual location: A customer purchasing from an address or location you’ve never heard of or somewhere you don’t have many customers may be fraudulent.
- Multiple purchases in a short timeframe: While receiving many orders in a day looks exciting, a customer purchasing many items in a short span is suspicious.
- Multiple orders by a single customer using multiple credit cards: A customer who purchased several items using different credit cards is also suspicious regardless of the time interval.
- Consecutive declined transactions: Customers make mistakes when shopping online, but four or five declined attempts of making a single transaction don’t look right.
- Inconsistent order data: Mismatching details of an order is an obvious red flag. For instance, the zip code and the city don’t match.
- Larger than average order: If a customer that usually doesn’t order a lot suddenly does out of the blue, it may not be them who’s doing it.
1. Audit your website’s security regularly
Fraudsters aim to exploit the loopholes in online shopping to get what they want. That’s why you should regularly audit your website’s security measures to ensure everything is covered. One thing you should do is to regularly scan your site for malware because fraudsters also use them to steal customer information.
Another thing to include in your regular security audit is to ensure secure communication between your customers and suppliers. Those are some of the most vital information fraudsters can steal and use to deceive you. So seeing that they’re encrypted is a must.
2. Verify addresses and credit cards
Verifying addresses and credit cards help greatly in preventing fraudulent online purchases. Using an Address Verification Service (AVS) and requiring Card Verification Value (CVV) will ensure that legit customers conduct all your transactions.
An AVS is offered by issuing banks and credit card processors to merchants to detect suspicious credit card transactions in real time. It checks the billing address submitted by the customer with their card’s billing address filed with their issuing bank. If it doesn’t match, the system either declines the transaction or flags it for investigation.
The CVV is the three to four-digit security code on the back of a credit card. Requiring all purchasers to supply this code for every transaction ensures customers have a physical credit card.
3. Try anti-fraud solutions
You can use anti-fraud software to protect your online store from fraudsters. There are plenty of them that suit your needs and budget. You can try hands-on solutions or opt to leave it to the hands of experts. Whichever one you choose, it’s good to have a proactive mindset because it’s a great way to address threats like fraud.
4. Don’t ship to non-physical addresses
Fraudsters like using non-physical addresses such as a PO box and other virtual addresses because they’re difficult to trace. Authorities won’t be able to track them down if their scheme is found. So you must avoid shipping to such locations and require your customers to provide a physical address to deliver their orders.
Wrap up
You can prevent fraud from happening by knowing how to do it. Knowledge is power when it comes to minimizing that threat. You’ll know how to protect your business from fraudulent purchases as long as you’re informed.
