How to Prevent eCommerce Fraud

This picture depicts a man committing eCommerce fraud on his computer.

Over 76% of companies report being victims of some type of fraud. Merchants estimate that 27% of their annual sales are from fraudulent purchases (American Express 2019 Digital Payments Survey). Every time a fraudulent purchase slides by unchecked businesses loose money. Fraudulent payments, phishing, and hacking have the potential to destroy an eCommerce business. We face this problem every single day. So, we know first hand what it takes to fight this battle. Realistically every company must learn how to prevent eCommerce fraud if they want to be successful.  

Before you learn how to prevent eCommerce fraud, you need to know common types of fraud.

Ecommerce is an ever-evolving industry, and scammers are constantly attempting new ways to cheat their way into unearned cash. There will always be the need to adapt and improve fraud prevention going forward. However, there are several common types of fraud you can stop or minimize right now.


We aren’t too sure why this is called friendly, we consider it to be quite rude. In this scam, people make dishonest claims to receive a refund. Here are some common occurrences:

  • customer claims they didn’t make the purchase so someone must have used their card unlawfully
  • customer claims they canceled the order but still received the product 
  • customer claims they never received the product
  • customer claims the product arrived damaged

Identity Theft

This is when someone attempts to steal and use information from legitimate customers. They normally use someone else’s credit card, along with any information they have on that person, to make purchases that seem legitimate.


Triangulation is a more complex type of eCommerce fraud. In this scheme, scammers set up online stores selling popular products, normally at a big discount to generate lots of sales. When they receive an order, rather than shipping the described product, they buy the exact same product from a legitimate retailer with the same credit card information that the scammer’s customer used. Then they refute the charge to buy the product from a legitimate site. This way the customer receives the product they ordered, the scammer gets paid for it, and the legitimate company pays the bill.


Scammers use emails, texts, and even phone calls to trick you into giving away personal information or clicking a link that will install malware on your computer. They will normally reach out with a message that seems legitimate or shocking. Once they have the information that they want they will use their information to make purchases or sell information.

How to Prevent eCommerce Fraud

Preventing fraud isn’t a perfect science. All you can do is minimize it to an amount that doesn’t drastically harm your business. But you can fight back. By seeing identifying fraud before you ship the order, you can prevent it from harming your business. Recognize the following indicators to prevent fraud as much as possible:

Address Matching

Criminals don’t direct fraudulent purchases to card owner’s home addresses. Obviously, they will opt to send the product somewhere where they can pick it up. This could be a vacant house or anywhere they can think of that gives them access to the product without connecting them to the purchase. If the billing and shipping addresses don’t match that is a red flag.

Trying Multiple Credit Cards to Checkout

If a customer tries multiple different credit cards that fail, there is a good chance they are testing stolen cards. Honest customers rarely mess up their card information multiple times in a row.

Abnormally Large Orders

Most people don’t need 14 bottles of vitamin d. If someone orders in large quantities they are likely planning to re-sell it. Check to see the customer’s order history. If they haven’t ordered before it has a high probability of fraud. And if they have ordered, see if large order quantities are typical for their account.

Orders Shipped to Locations Known for Forwarding

There are certain locations across the United States known for forwarding. We won’t call out specific locations here, but keep your eyes out for high fraud delivery areas. For example, is there a delivery city or area where you have found lots of fraud attempts against your company? These will often be coastal cities that have easy access to forward your product out of the country.

Orders with Expedited Shipping

Often those making fraudulent purchases choose the fastest shipping option. The sooner they get the product the less likely they are to get caught. Plus they aren’t paying for the shipping personally, so why not speed up the process.

Blacklisted Match

When you catch or fall victim to fraud, you need to document the details in a blacklist. If any of the data from previous fraudulent orders match a new order, you’ll know it’s likely fraud. For example, if the same credit card, billing address, or shipping address shows up, you need to know that it’s associated with past fraud.

How to Handle Suspicion of Fraud

Learning how to prevent eCommerce fraud can be complicated. Clearly you can’t go calling the police every time a billing and shipping address doesn’t match. After all, people order stuff for other people all the time. So, what can you actually do when you suspect a purchase is fraudulent?

#1 Contact the Customer

If the purchase was legitimate you probably won’t have a very hard time getting in touch. Calling them is the best option if you require phone numbers. Ask them about the purchase and a few security questions to verify the legitimacy of the order.

#2 Don’t Ship the Order

If you can’t confirm the order isn’t fraud, don’t ship the order. It will reduce risk and make life easier for your business if you consistently avoid fraud, even if it takes some extra work to confirm orders. 

#3 Report Fraud

If you do find fraud, report it. Do the world a favor and help get rid of the bad guys. Here’s a link to the FTC where consumers and sellers can report fraud to the U.S. government.

Learn how to prevent eCommerce fraud with the right software.

Without the right software, fighting fraud is a losing battle. The software can do the heavy lifting, leaving you with a manageable amount of required work to prevent fraud.

Here are three good options to help you fight against scammers:


Pricing varies from $19 a month + $.05 per transaction to $249 per month + $.01 per transaction. The best option for you will be dependent on what tools you want along with order volume. One of Subuno’s many features is risk scoring where they consider a wide spectrum of factors to provide a fraud risk score for every order. 

Fraud Labs Pro

You get what you pay for with this service, which has prices ranging from a free version to $1,250 per month. One thing they advertise is their massive database of blacklisted information. This helps them spot fraud attempts because of their association with fraud attempts against other companies.


They advertise that average customers spend an average of $0 on chargeback losses of orders approved by Signifyd. Also, they advertise an average of an 8% increase in accepted orders. Combining an increase in accepted orders with a decrease in fraud makes a strong case for Signifyd. For a price, you will have to contact them directly.

There are a plethora of quality software providers available. We think it matters more that you use one than which one you use.


Fraud takes many shapes and forms, and it has the potential to destroy your eCommerce business. You need to be aware of red flags and have a quality fraud prevention software if you want to have a fighting chance. But if you learn how to prevent eCommerce fraud, scammers can be more like an annoying horsefly than a roaring lion. If you found this article helpful, check out our piece about protecting your brand.


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