Ecommerce Fraud Holiday Defense Guide

The holiday season is officially underway and internet fraudsters are working overtime to sneak more fraudulent online orders through the cracks in the wall of your busy Ecommerce order processing staff. All order volume increases during the holiday season, whether it’s legitimate customers or online fraudsters, and the bad guys know that. This is why they step up their game during the busy Ecommerce holiday season– they’re counting on your staff to be too busy to catch the upsurge in fraud and let more fake orders slip through.

You won’t find a solution that can effectively eliminate every instance of online fraud from your Ecommerce store, but there are a few simple things you can do to identify and stop more bogus orders not just during the holiday season but throughout the year.

Flags for Ecommerce Fraud

Strange as it may seem, a lot of online fraud orders seem to have quite a bit in common with one another. Here are some things to look out for that should raise your level of alertness. Any of these flags is cause for concern but 2 or more of these in one order should definitely take the order out of the normal processing flow so that it can be researched more deeply.

• Free Email Addresses from providers like Yahoo, Hotmail, Gmail & others don’t always turn out to be fraud, although the vast majority of fraud orders are associated with free email addresses.
• Priority Shipping Methods like Next Day or 2nd Day Air are used by legit customers if something is needed to arrive sooner but criminals choose priority shipping methods because it can cause an employee to rush through the order process, potentially looking over some obvious fraud indicators.
• High-End Products are easy targets for online fraud. Orders for electronics, software or other high-priced items are among the most sought-after ticket items by online fraudsters. Any order for a high-priced item should immediately be under closer scrutiny, especially if the quantity is higher than normal.

Digging Deeper

Once you’ve identified a fraud order, you’re going to want to do a little addiitonal research to confirm or reject any suspicion. Following are a few of the things you can do to tell whether you’ve got a fraud order on your hands.

• Tracking IP Addresses will usually give the fraudster away. There are a ton of IP tracking tools available on the web; use a few of them to confirm the location because it can jump around a bit sometimes. If your setup doesn’t allow it, then you should drop it and go shopping for an Ecommerce store that can track IP addresses.
• Research Customer Information to find out more about the integrity of the order. You can Google the telephone number (use dashes) to find out of the number is associated with a business, find out if it’s a cell phone and sometimes get an even better idea. Additionally, web searches for the shipping address can sometimes result in real estate listings that suggest your product would be shipped to a vacant location, dropped off at the door, and scooped up by your Ecommerce thief.
• Contacting the Customer to confirm the order is probably the best way to determine if the order is fraud. Lots of times you’ll find the telephone number is not in service, goes to a fax line, or goes to a generic voice mail. These are often-times indicators of fraud. If you do speak with the customer, you can usually make a determination of order legitimacy after speaking with them.

How to Handle Fraud

Obviously, any order that leans more legit than fraud at the end of this test should go back into the order processing stream to be processed normally. Try to create a good procedure to identify & resolve your Ecommerce fraud orders so that it doesn’t take up too much time. If at the end of this process the order leans more fraud than legit, then it’s time to stamp out your order. Here are some important things to remember:

• Tangible Product Orders are easy to resolve. Simply do not ship the order. Cancel it and either void the credit card charge or issue the refund as quickly as possible to avoid a possible Chargeback which can count against you in the eyes of your credit card merchant.
• Download Orders are a bit trickier. If the product has already been downloaded, you should deactivate the download and note in the order notes that it is under suspicion of fraud. If the product hasn’t been downloaded, deactivate the download immediately and void or refund the order with your credit card merchant.

Even after you take these solid steps to defend your Ecommerce store from online fraud, you’ll find that some orders will always get through. When you receive a chargeback notification, be sure to respond by the due date given or it won’t matter if it’s legit or fraudulent. If you believe the order is legit, then prove it with any and all information you have. If you believe the order is fraud, don’t waste time trying to prove that it isn’t. Just write “Proceed with chargeback” and fax the request back per their request. No sense wasting more money to try and prove the legitimacy of an order when it’s clear that it’s fraud!

While you can’t elimiate every instance of fraud in your Ecommerce store, you can significantly cut down on it by following the above steps. Make a uniform procedure that everyone can follow easily & quickly and you’ll waste a lot less time dealing with Ecommerce Fraud this holiday season.