Warning Signs of Fraud
We've listed some of the warning signs of fraud below. These warning signs are only factors to consider when reviewing an order. No one of these warning signs is a sure indication that an order is fraudulent. Likewise, there is no guarantee that if an order has none of these factors, that it's a legitimate order. These factors are provided to help merchants identify high risk transactions and when to do a little extra research on verification before completing the transaction.
You can use Risk Tools to apply AVS and CVV Rules which can provide an extra level of information to merchants in deciding to accept or decline a transaction.
- Suspect ship address. Orders from Romania, Macedonia, Belarus, Pakistan, Russia, Lithuania, Egypt, Nigeria, Colombia, Malaysia, and Indonesia have a very high incidence of fraud, and often have unverifiable addresses.
Unless you have a lot experience with international orders, you may want to decline to ship to these countries, even if you get a valid authorization from the credit card company. (If you read the fine print of your merchant agreement, you will usually find that an authorization doesn't guarantee you'll get paid.) If you want to go through with the transaction, be sure to do some checking to verify that the order is legitimate. Fraud is less of a problem with orders from North America, Western Europe, or Japan. But, it's still a possibility.
- Untraceable email address: In many fraudulent orders, the customer's email address is often at one of the free email services, (Yahoo Hotmail, GMail) which are relatively untraceable.
- Expensive items: Be wary of big orders, especially for expensive brand-name items. Any order amount that seems out of the normal range should be investigated more thoroughly.
- Multiple items: It can be a bad sign, for example, if someone orders three watches or three MP3 players at once, especially where the items have a high resale value.
- Express shipping: Most fraudulent orders specify overnight or one-day shipping since the fraudster is not concerned with the cost.
- Shipping address differs from billing address: If you are selling valuable items, it can be a good policy only to ship to the billing address of the card. You run the risk of losing out on gift purchases, especially during the holiday season, if you should make this a rule.
- Suspicious billing address: If the billing address is 123 Main St., New York, the order is probably fraudulent. You can use Yahoo Maps or another location tool to see if the address can be verified.
- New site: Newly opened sites are more often targeted, perhaps in the belief that the merchants will be inexperienced.
- Leave at door: If someone placing a very valuable order says just to leave it at the door, it could be a sign that a crook is using some unwitting person's house as a drop-off point. (Solution: only ship with a carrier where you can require a signature for delivery.)
On their own, any one of these warning signs do not necessarily mean that an order is fraudulent. However, if an order has multiple warning signs, you should investigate the order carefully. As a general rule, you should never ship a valuable order unless it checks out. And be aware that getting a valid authorization is no guarantee that the order is legitimate.