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Creating an effective dispute and fraud prevention strategy that best suits your business can help prevent fraud from occurring. By employing some of these best practices as part of your overall strategy, you can avoid excessive chargebacks and reduce potential customer burden and losses.

5 Tips to Detect and Prevent Fraud

1. Contact Customers to Reveal Fake Info 

Often fraudsters will use fake email addresses or phone numbers, so by sending a simple templated email you could see a drop in fraud immediately. If the email is fake, you'll get an error stating that the email address does not exist, exposing the scam. Calling the customer under the guise of verifying their shipping address may also raise some red flags. A nonsensical or evasive answer is typically a good indication of potentially fraudulent behavior.

2. Manually Review Payments

Taking a few minutes to look over an order is often all it takes to detect and prevent fraud. Here are some considerations when reviewing a payment:

• Does the billing address match the shipping address? Does the AVS (Address Verification Service) match?
  • If a payment's billing and shipping address don't match, look into the shipping address using Google Maps & Street View to find out more. A common tactic that fraudsters use is to have orders shipped to a freight, a mail forwarding service, or a storage facility that forwards the goods to their actual location.

• Does the customer have previous transaction history with you?

• • Fraudsters are always looking for new victims, and the risk of fraud is much higher for a new customer than it is for a repeat customer.

• Does the customer's email address match the cardholder's name?

• • Sometimes email addresses are random, but looking at the email and seeing if the first or last name is included could help identify potential fraud.

• Is this an order that the customer has asked to be expedited?

• • Often fraudsters are eager to receive the product before the actual card holder reports it stolen so they will sometimes reach out to the store and request for it to be expedited.

• Was the order changed or altered after it was placed?

• Selecting Store Pickup then calling in later and requesting it to be shipped instead is a common way fraudsters will use to avoid billing/shipping address verification. They may also place a smaller order initially and then call in to add more items with a different card once they suspect their fraud wasn't detected.
  
  

3. Create Store Policies

Taking the time to put policies in place with your staff is often the most effective way to protect against fraud. We hear stories all the time of shops making an exception one time to their store's policy and it turning out to be fraud. Train your staff with clear, concise policies and they'll be empowered to help protect your business. Here are some considerations when creating policies:

• Set transaction limits for over-the-phone orders.

• • Over-the-phone orders are by far the riskiest type of transaction for a retail business. Work with your staff to set limits on what can be purchased and how much.

• Set limits for high-priced items.

• • More expensive items are primary targets for fraudsters since they can be resold for a large profit. Listing these products online but requiring them to be purchased or picked up in-store may be the safest option.

• Call or email the customer before fulfilling anything.

• • As mentioned earlier, attempting to contact the customer can show you that a phone number has been disconnected or an email is invalid, both of which are good indicators of fraud.

• Check IDs!

• Checking IDs shouldn't always be required but for larger purchases many stores require customers to provide the ID at checkout so the clerk can compare it to the card being used. For larger online sales, some stores require 'selfies' with the customer holding their ID next to their face to verify their identity. This is especially relevant for curbside or in-store pickup.
   

4. Don't Be Afraid to Block Some Real Orders

In an effort to protect against fraudulent orders, you will likely run into situations where you've blocked or refunded a legitimate order. That's okay! If they call or email back in, you can help them place another order by requesting more information to validate it. Some stores even provide a small gift inside the order as an apology for the mix-up. It's much less expensive than losing the inventory for a fraudulent order and paying chargeback fees.

5. Utilize Tools Provided by Your Payment Processor

Each processor has its own fraud prevention tools and systems. Learning more about what tools you can use or that your processor can use on your behalf will help exponentially in the long run. Additional resources may be available at additional cost so don't hesitate to reach out to them.

Bottle POS Payments partners with Stripe (the same payment technology group that Google, Amazon, Lyft, Zoom, and many others use) and Adyen. Click here to learn more about Stripe's features.

Bottle POS Payment's anti-fraud tools use artificial intelligence and machine learning to adapt and learn from fraud happening all across the world to better protect you. Every single transaction done through Bottle POS Payments is scanned and assigned a Risk Value. This scoring allows us to block hundreds of thousands of fraudulent sales every year before they ever get to you. Bottle POS Payments also has partnerships with VISA, Mastercard, American Express and leading banks to provide an additional level of security.

With that said, we can't block everything, and fraudsters do sometimes get through which is why it's so important to arm yourself with the right tools and policies.

Bonus Tip:

Educate yourself on the latest trends and preventative measures to protect against fraud. Free resources like the FORTER Fraud Attack Index are great resources to read.

You've Identified a Fraudulent Order—Now What?

Refund the order as quickly as possible and don't fulfill it. You can also contact our Customer Service to have them block the customer from ever purchasing from you again. Transactions that we identify as fraudulent are automatically reviewed to see if the card number, IP address, email address, devices, and more should be blocked.

Related Topics

How to Enable the Fraud Warning

Global Fraud Protection

Frequently Asked Questions

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