Online security is important to almost all businesses, but it is particularly important if you sell online and accept online payments. You can end up out of pocket and/or your reputation can be damaged through fraudulent transactions. In fact, research by Sage found that fraud is the number one issue for online customers – it ranks higher than cost or convenience. One of the frauds you have to protect your business against is order fraud.
Order fraud takes many forms, but in in simple terms it involves fraudsters getting you to send items which they then avoid paying for. They could do this using a stolen credit card or by a number of other methods.
Below are some things you should look out for. They are all things that security experts describe as flags. As such, none of them are absolute indicators of fraud so they can also apply to many legitimate transactions. They should, however, be looked into when spotted.
In general, if the delivery address of the order looks strange or suspicious, look into it. This includes checking when an order is from a previous customer, but the delivery address is now different. You should also check if the delivery address for the order is different than the delivery address on the payment card.
Other transactions you might have to place additional checks on are international orders, particularly if it is a country you don’t normally sell to. Another flag is where your delivery costs are particularly high, but the customer doesn’t appear concerned.
Other ways that fraudsters use delivery addresses is changing the address at the last minute, or calling you on the day the items are being delivered to get an exact time of delivery. This behaviour might be someone who is trying to intercept the delivery.
Use your instinct in regard to customer behaviour. As a starting point, look out for transactions that are out of the ordinary. In particular, identify transactions that are larger than typical transactions. Another flag would be a customer purchasing large quantities of an item which is usually bought individually. These sorts of transactions warrant further investigation and checks before you process them.
Another situation that you should consider looking into further is where a particular customer completes a lot more transactions than you would typically expect over a certain period of time (particularly if it is a short period of time). Or are they processing a transaction without asking any questions when most other customers have queries before they complete a purchase?
Transactions where the payment is split across more than one credit card is also a possible fraud indicator. Finally, be cautious of rush orders, particularly if the items are high-value or are being purchased in large quantities. You should pay particular attention to orders where the purchaser wants you to send items on a particular day via overnight delivery.
What Should You do?
What should you do if you see one or more of these flags in a transaction, and what should you do in general to protect your business against online order fraud? Here are three tips:
- Ask for more information about the purchase and the purchaser. You can even ask for ID to prove the delivery address or phone the customer using the number you have on file to verify the information.
- Online verification tools like Verified by Visa or MasterCard SecureCode also give you another layer of protection.
- If it is a business customer, look for evidence they exist and/or check their credit history.
Of course, it is a balancing act. After all, you don’t want to lose legitimate sales because your fraud checks are too stringent. Protecting yourself against fraud is, however, essential.
For more tips and advice in your business please contact a member of the Gilroy Gannon team today.