Learn to recognize and stop potential fraud on your site by familiarizing yourself with some easy checks and balances.
There is nothing that we, nor anyone else can do to guarantee that any given sale is valid and not fraudulent. As is true for in-store interactions, the merchant is ultimately liable for choosing to fulfill an order.
Why do fraudulent payments pass verification?
The vast majority of orders are legitimate, but it's important to be cautious. In spite of the automated fraud filters and verification methods that payment processors utilize, some fraudulent transactions happen on any platform. This is partly because payment verification can only be so stringent: in order for all of the legitimate transactions to go through, a small amount of leeway is built into these systems and some fraudulent orders slip through.
Automated fraud detection systems are good and getting better, but they cannot catch every contextual clue that a human might. We recommend reviewing each order with a critical eye. This review process can help to catch fraudulent orders before they are fulfilled, preventing the loss of products and funds.
Identifying Suspicious Transactions
- Learn the signs of potential fraud and look for them on every order:
- Google the shipping and billing addresses. If the result is a freight forwarder, UPS Store, or strange business, this is a potential fraud flag.
- Do the same thing with the phone number and check if the result is a business listing, or doesn't seem to match up at all with the cardholder's name
- Different billing and shipping addresses are not a guarantee of fraud, but warrant careful review.
- Call the number and ask for the cardholder by name. Potential flags can be if the phone number is disconnected, number cannot be reached, does not follow up on messages, or if the person called is not aware of the order.
Additional Tips
- Just because an order is cleared, or passes a fraud check by a payment processor, does not mean the order is not fraudulent.
- Once fraudsters are successful at receiving merchandise, they may come back repeatedly until you figure it out. That can be for shipped or picked up items.
- One crucial way to avoid being a victim of online fraud is to learn to spot the signs of a fraudulent online sale.
- Here's a list of some things that should make your “fraud radar” kick in:
- Expedited Shipping
- Large dollar amounts or multiples of high dollar items.
- Forks, electronics (especially Garmin), car racks, and group sets are common targets.
- Email addresses that don't resemble the customer's name in the slightest.
- Unusable or incorrect billing phone number.
- Unrecognizable or illogical city or street names in billing or shipping addresses.
- Multiple sales completed with different credit cards.
- Multiple orders of the same item within a short time period
- Orders with multiples of a single product that are not commonly ordered in multiples (Cranks, Derailleurs, Shoes).
- Billing and shipping addresses are different.
When you edit a sale, you can click "Fraud Alert" at the top left of the screen to view items we see commonly ordered with fraudulent transactions. This also gives you the chance to report a potentially fraudulent sale to us. Reporting fraudulent transactions helps us develop our fraud prevention tools.
In-Store Sales & Pickup Practices
- Remember that in store pickup orders are not guaranteed to be legitimate.
- Ensure that your Order Confirmation includes messaging that an ID and credit card used is required for pickup and that your Shipping and Returns Policy includes this information as well.
- Consider holding orders for high value items or first-time customers before releasing order.
- This allows time for payments to be processed, reviewed, and for your in-store order review.
- Carefully verify the credit card and the ID of the person completing the sale or picking up the order.
- Do not allow the product to leave the store if the card presented does not match what was used for the order
- Do not allow a product to leave the store with someone who is not the listed cardholder and does not have a photo ID. That includes third party services/apps that pick up and drop off products.
- Ask for additional identifying information if there is any doubt about the person's identity.
- Use additional caution on in-store pickup sales when the credit card billing address is out of state.
- We recommend following this process for all in store pickup orders.
- The more documentation you collect at pickup, the more information you will have for record keeping and for future reference in case of a chargeback.
Shipped Orders Best Practices
- Consider instituting a shipping delay for high-value orders or shipments to non-verified addresses or first-time customers.
- This can be for your own review, a payment processors review, or any reason you choose.
- Make sure your policies page matches the number of days you will hold an order.
- Holding an order for review by a payment processor and then them approving is not a guarantee that the order will be legitimate.
Supplier Fulfillment
- We highly recommend keeping supplier fulfillment a manual process and not turning on automatic fulfillment.
- This will require you to first verify the sale and then manually request supplier fulfillment.
- Use all steps noted above to verify the transaction before requesting fulfillment.
- If a shipped order needs to be canceled, contact the supplier that shipped the order.
It is impossible for this system to prevent all fraud. Retailers (with any payment system) need to exercise caution in fulfilling orders. This is ultimately the merchant's responsibility.
Managing Payment Methods
- Each payment method follows a different process for chargebacks, fraudulent transactions and order review. Review our resources on Stripe, PayPal, Klarna, and Authorize.net to learn more about each process.
- Manual Payment Capture
- Manual payment capture can be a helpful tool to review payments before fulfilling orders. This feature allows you to review each sale before capturing payment.
- Review our help center articles on each payment method for more details on manual payment capture, when available.
Canceling an Online Sale
You've received an online sale you suspect to be fraudulent and wish to cancel it, what do you do now?
- Process a return for the order
- If you have manual payment capture turned on, void the authorization within the sale if it has not been captured.
- If you do not have manual payment capture turned on or the payment was captured, issue a refund within the sale.
- Report the order for Potential Fraud using our Potential Fraud Form.
If a suspicious order displays an error when processing a refund, this may mean the card used has been canceled and cannot be refunded. Please contact us if you have questions about orders that cannot be refunded.
Additional Resources
Learn more about the Types of Fraud
Workstand Help Center Articles
Payment Processor Articles (External Links)