Detecting Fraudulent Orders - THE SALE - Electronic Commerce 101

While most fraudulent emails inquiring about purchasing will come from foreign countries, they are by no means the only places from where fraud attempts will come. Most of the actual fraud orders you receive will be from right here at home. Those orders are a little harder to catch, but can be found and even prevented before you get them, with a little vigilance.

The number of fraud orders will increase, as your website becomes more popular, and will be related to the resale value of your products. Electronics, jewelry, computers, and video games are large targets of fraud because of their value and the ease for the thieves to sell them.

Your first layer of defense is your shopping cart. Make sure your shopping cart is requiring customers to enter the needed information to determine fraud. Most commercially made shopping carts will. At the absolute minimum you will need full name, billing address, phone number, credit card number, credit card expiration date, and the credit card CVN number. You should also require a shipping address if you will allow shipping to places other than the billing address, and an email address.

Some shopping carts have fraud features like the ability to block orders from certain countries or IP addresses.

Most payment gateways provide at least basic protections including AVS(Address Verification Service), a process where they check with the credit card issuer to verify that the address given for the order is the billing address of the credit card. They also provide CVN(Credit card Verification Number) checks, which compare the number on the back of the physical credit card with the number on file with the credit card issuer to make sure the person using the credit card actually has the credit card in hand.

For an extra fee, some gateways offer fraud suites where they use information from the order to give you odds as to whether or not the order is fraud.

If the order passes the payment gateway's checks, that doesn't guarantee the order is legitimate. There are still plenty of other flags you should be on the look out for.

On the next page we'll look at some of the basic flags that should warn you of potential fraud

Warning Flags of Fraud >