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How to Detect Fraudulent Orders
By Bright Builders
Fraudulent Orders
We are presenting this information because of a high number of fraudulent orders being placed on the Internet recently. While fraud does exist, you can reduce your risk against fraud. The information contained below will increase your awareness of what to look for and what to do if you suspect fraud.
Fraud is an issue that affects nearly all businesses on the Internet. As a merchant you must always be aware of fraud. It is your responsibility to avoid fulfilling fraudulent orders. Although we have had very few reports recently of problems with fraud from our customers, a report of one of our customers has prompted this article.
How to detect fraudulent orders
Any of the following STRONGLY indicate a fraudulent order:
- An order originating from Nigeria, Malaysia, or Indonesia. If you receive an order from one of these areas there is a 99.99% chance that the order is fraudulent. The order will be placed using a stolen credit card or otherwise.
- An order requesting a very large quantity of an item (for example, an order for 400 Jerzees t-shirts.)
- Multiple orders from the same address with different payment methods or multiple orders with the same email address to different shipping addresses.
- Multiple declines with different credit cards. In your order manager, if you see the same customer being declined several times with different credit cards before successfully charging a card, the customer likely has a list of stolen credit cards that is being used.
Any of the following MAY indicate a fraudulent order:
- An order from high-crime areas such as inner city Los Angeles.
- The name of the customer entered in lower-case letters. A legitimate customer is more likely to enter his/her name using capitals while a thief is very likely to enter a name in lower-case letters.
- An address verification failure. Our implementation of both ECHO and Authorize.net handles address verification. This means that if the address on the credit card does not match the address entered during checkout, you will receive a message on your order confirmation email indicating that the address did not match. (Please note that the credit card will still have been processed - see what to do if you receive a fraudulent order below.)
How to reduce your likelihood of receiving a fraudulent order:
1.Turn the address verification prompt option on (found in store settings -> payment settings.) Please note that this will not stop a fraudulent order from being placed, but it will help in two ways. First, it will deter fraud. Those who place fraudulent orders generally avoid sites that have address verification. Second, your copy of the order will warn you that the address verification failed, allowing you to detect fraudulent orders.
2.Turn the collect CID/CVV2 option on (found in store settings -> payment settings). Please note that this will not stop a fraudulent order from being placed, but it will help to deter fraud. Those who place fraudulent orders generally avoid sites that collect the CID/CVV2.
Bright Builders customers have reported a great reduction but not a complete elimination of fraudulent orders when using these measures.
What to do if you receive/suspect a fraudulent order:
1.Refund the credit card transaction.
2.Do not ship the product.
3.Email the person making the suspected fraudulent order and ask that they pay by money order or cashier's check.
About the Author
©Bright Builders | 2005 http://www.brightwebsite.com
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