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Online fraud and how to beat it

Online fraud and how to beat it
Monday, June 7, 2010
Fraudsters are making the internet a sometimes dirty place to shop.

We continually hear of ecommerce merchants being hit with chargebacks. We ourselves even get hit as well on occasion.

Everyone has their own way of verifying orders and once you have been trading for awhile you do start to get a feel for orders that are slightly smelly.

We use our own Fraud Alert system to verify orders which come in through the shopping cart which pretty much killed off 99% of chargebacks. The Fraud Alert system rates an order out of 10.

If an order rates over 2.5 we do a follow up phone call before sending the software. 9 times out of 10 it is a wrong number so we just refund the order. And for the 1 out of 10 it is a real customer we just use the call as a thank you follow up for ordering.

Others use a combination of IP checking and having a black list of countries they do not sell to. Or at least follow up on if they receive an order from for example Nigeria.

But how to play safely when you are new to being an online merchant? It is very easy to start enjoying yourself, pumping out orders, seeing the money start coming and feel complacent.

And then WHAM! You get your first chargeback. Ouch. You lose the money from your account and if you sell physical goods then the item has been shipped and you have lost that as well.

Before we started using the Fraud Alert system the way we used to check orders was to look at the IP address and do a check to see if the IP address is the same as the country the customer has said they are from.

This is a biggie and a really quick and easy way to tell if someone is pulling your leg.

If they use a Hotmail, Gmail or Yahoo account is next on the list. 99% of fraudsters use one of these. You will very rarely, it can happen but rarely, have a fraudulent order from someone using a real company email address.

Also have a look at the email address. For example, [email protected], is probably not someone planning on using their own credit card info.

If you are a VP-ASP Cart user then our Fraud Alert system could save you quite a bit of your hard earned cash.

If not, the above tips should at least help pin point orders that at the very least deserve a follow up phone call to verify if they are legitimate.

Hope this helps someone avoid at least one chargeback!

Cam Flanigan
VP-ASP Cart Blogger


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