Wednesday, October 1, 2014

The Telltale Signs of Online Fraud

Fraud. If you accept online transactions, it is a reality you must deal with. It sucks being burned, and as a business owner you are twice burned. First, the fraudulent purchase funds are returned to the card issuing bank, and second you also lose product that you paid for. It hurts. I've learned a thing or two about preventing falling for fraudulent orders. I thought this information would be helpful to my fellow audio store owners.  Below are the telltale signs that someone is using a stolen identity or credit card to make a fraudulent purchase.

Telltale sign #1: Billing vs. Shipping address

If your store receives an online order where the billing and shipping address are different, do the following.

  1. Do a Google Maps search on the shipping address - Many times fraudulent purchases are sent to vacant homes, or businesses that receive shipments for people. These businesses are more than a PO box, they can also accept Fedex, UPS etc. A quick Google Maps search can reveal this. If you find it is a business that accepts packages, call them and alert them that the person who owns a drop box there is committing fraud. They are well equipped to deal with those individuals in most cases.
  2. Call the phone number on the order - talking to the person is the absolute best method for clearing things up. If it is a fraudulent order, chances are the perpetrator will not want to talk to you.

Telltale sign #2: Wonky email addresses

Many times Fraudsters will use a generic email address, or the name listed on the order is completely different from the name in the email ID. For example: you get an order from John Smith, and his email address is This sends up two red flags for me. First and obviously the names don't match. Second it's an email address that can be totally made up out of thin air by using an online email service like hotmail, outlook, etc.  Again, calling the customer is the best bet, but if you cannot get in touch with them use the email address and see if they reply. If they do reply, look at the closing, did they sign it with their "name". If it is fraudulent, they probably left any closing off. These criminals are using so many names and email addresses they don't want to make the mistake of using the wrong name.

Telltale sign #3: Disconnected or Wrong Phone number

Often times, they will use a phone number that does not exist. The easiest way to find out is to call it.

Do you see a pattern emerging? 

On larger orders, calling the customer to confirm everything is good customer relations, and can keep you out of hot water with chargebacks.

Funny story. I actually had one fraudster put the actual number of the card owner in the order, thinking I wouldn't call it. It gave me a good feeling to let that person know that someone had stolen their card.

Set Yourself Up For Success

Aside from following these guidelines, choosing the right merchant card processing service can save you from trouble. Some processors such as allow you to set parameters for processing credit cards. You can set them to decline orders, or merely flag them for you, until you can investigate them. Then you manually process the transaction. Paypal merchant card processing services offer their own seller protection, as well as declining and flagging transactions that don't meet their criteria.

Other Things You Can Do If You Suspect Fraud

  1. Call your merchant card processor. They can give you information that may offer more clues as to the authenticity of the order. Tweek Geek's merchant card processor will authorize funds, but won't process a transaction if there is a billing/shipping address mismatch. They flag the transaction which lets me know I need to do some investigating.  I can manually process the transaction once my investigating satisfies my confidence in the authenticity of the order.
  2. Call the card issuing bank. - if you have the name of the card holder, and the card used, you may be able to call the card issuing bank to see if the card has been recently reported stolen.  Most merchant card processors are kept up to date on card thefts, and won't process a card that has been flagged as stolen. Of course it is up to the victim to report the card stolen, but they may not know.
  3. Google the person's name and location - Most everyone has SOME information about themselves online, and a Google search can reveal their business or employment, their linkedin or Facebook profiles for example, or public records. Yeah it's creepy that this stuff is out there, but you need to protect yourself. I only use this information to verify someone's existence and location if I have never received an order from them before. I also only do this if the order trips one of the above telltale signs. It can be a time saver. But I still feel the phone call is the best action one can take.

Other Resources

1 comment:

  1. I learn some new stuff from it too, thanks for sharing your information.
    online fraud detection