Handling Medium/High Risk Orders & Combating Fraud (Shopify)

Combating fraud.

If you're hosting your own Shopify store - independent of any marketplace (and the protections that come with those) - then you may occasionally run into potentially fraudulent orders and will need to arm yourself with the tools and knowledge to effectively combat these.

Fortunately, Shopify comes with tools which are more than adequate to easily combat fraudulent orders, if you know what to look for. 

This guide will teach you what to do when one of your Shopify orders are flagged as Medium or High risk.

Fraudulent orders are less of a problem on third party marketplaces such as Etsy and Amazon because they act as a middle-man, providing protection for both buyers and sellers and resolving disputes.

If you are a new seller and are not confident with dealing with the occasional fraudulent order, it's recommend you try selling through Etsy instead, due to their in-built fraud prevention. 

Examine Fraud Analysis.

If an order is flagged as fraudulent, you will be notified by Shopify.

The order will not yet enter production and must be manually verified and confirmed by you to be genuine. You will need to review the Fraud analysis presented by Shopify's automated systems.

• Head to the order in Shopify and click on it.
• On the right you will see the Fraud analysis section
• Identify if the order is flagged as Medium or High Risk.
• Click view full analysis.

On this screen you will be presented with a breakdown of the reasons why the automated fraud detection flagged the order. Highly suspicious reasons are shown with a Red dot next to it, minor suspicious reasons are shown with a gray dot, and indicators that the order is genuine are highlighted with a Green dot.

In addition to reviewing the fraud analysis screen, you can also review the conversion summary, which is just above the fraud analysis on the Shopify order page. This will give you information about where the customer came from, which can be useful for additional insight in making a decision on whether to allow the order.

 

Identify key fraud concerns.

Now we know why the order was flagged, you need to objectively review the information and make a decision on if you are to accept the order as genuine.

Next we will examine the more important flags and help aid you in making that decision.

Remember, it's always better to cancel an order if you are unsure, the customer can always try and place it again. If an order is fraudulent, that could mean dealing with a potential chargeback later, which can be difficult and time-consuming. 

 

Shipping & Billing Comparison

The first thing you should check is the consistency of the billing and shipping addresses and information.

This is a big indicator of fraud, as fraudsters will use stolen card details (names, addresses, and card numbers) to place orders.

These orders will use the billing information of the stolen card, but be delivered to someone and somewhere else entirely. It's important to check:

• Do the names match, or are they apparently related? (same surnames?)
• Do they seem to be relatively close to each other (same state or similar location?) or are the two addresses in entirely different places?
• Could the mismatch be due to a typo? Or are the addresses totally different?

If the order is high risk due to multiple other factors, and if the names are not a match at all, and the billing doesn't match card (as identified above), it's probably safest to go ahead and cancel the order.

However, sometimes simple mistakes can happen, so it's also important to consider:

• If the billing address is the same as the shipping address, but the billing ZIP was a mismatch, waive concern.
• If the address is obviously typo'd (such as same information being placed in the wrong boxes) and is otherwise fine, waive concern.

 

Check the conversion source.

It's also helpful to consider where the order came from. The conversion summary can help with this.

• if the order came from a session on social media, then this is usually fine.
• If the order came from a direct site visit, this can be suspicious.

If you're running social media ads, then you would expect most genuine orders to come from there. Orders arriving from direct site visits may be suspicious as it shows the order came from an individual returning to the website directly - for example, once they had obtained stolen details and were able to return to pay.

 

Do the items being ordered make sense?

You should also check to make sure that the items being ordered are typical of normal customer behavior for your store.

For example, someone ordering a product labelled "to wife" would probably only order one of such item (as a gift). Orders containing multiple "to wife" items could be considered suspicious.

Alternatively, multiple quantities for items to grandchildren, niece/nephew or friends make more sense.

You can get an idea of what makes sense for your store by reviewing previous orders and looking at the types of items typically bought, and in what quantity. If the order falls outside this normal behavior, it is suspicious.

In addition, if the order has express shipping in combination with the above, it might be considered suspicious. As fraudsters tend to want faster shipping so they can get the items as soon as possible.

 

Payment Methods

Within the order timeline on Shopify, you should check if there were any failed payment attempts. If there were, click on them to expand them and check:

• The name on the card - This should be the same (or a clear relative) for each payment attempt. If it is not, cancel the order.
• Reason for decline - should be insufficient funds or CVC incorrect, if anything else, cancel the order.
• Number of unique cards attempted - should be same card a few times, not a few different cards.

 

To conclude.

A normal order will not raise too many flags. It's understandable for genuine customers to make errors with their billing info. However, the previous steps help us to build a picture of how genuine an order feels.

Remember:

• There is nothing wrong with cancelling a genuine order if there's enough basis for you to doubt its authenticity.
• If a customer screwed up their billing details, they can try placing a new order with correct details later.
• Combine Line Item sanity checks with billing, fraud, and seller checks. If there's many fails, it's safest to cancel.