When you are selling on Shopify, you will want to comprehend the possibility of fraudulent orders. As a store owner, you know that dealing with fraudulent orders is a part of the game only. However, that doesn’t mean you must accept high-risk jobs without fighting. Shopify’s fraud analysis tools help eliminate fake orders before they cost you time and money.

In this article, we’ll explore and analyze the fraud analysis tool, as well as skim some tips on how to deal with high-risk orders on Shopify. 

Shopify fraud

Shopify Fraud Protection

Shopify has a tool that is built-in fraud analysis. It can help you define high-risk orders. Besides, this tool is designed to help to prevent you from potential chargebacks.

If an order appears suspicious, it suffers a fraud analysis to identify if it is likely to be fraudulent. This helps protect you and your customers from probable fraud and chargebacks.

Fulfilling high-risk Shopify orders can lead to an increasing number of chargebacks, which can result in payment processing disablement and removal from Shopify Payments.

 What is a high-risk Shopify order?

A high-risk Shopify order is one that has not been authorized by the cardholder.

High-risk or fraudulent transactions may include lost, stolen, fake or synthetic credit/debit card orders. Besides, high-risk orders can also occur in the form of familiar fraud, where a customer receives an order and later claims the order has not been delivered or the product has been damaged.

All fraudulent orders on your Shopify store carry overwhelming risk. For starters, you will lose your product/service and your pockets will be emptied by ancillary costs such as shipping and so on. Additionally, if the credit card company voids the transaction, you’re turned over to a chargeback.

How to identify a high-risk order?

Shopify provides several functions to help you determine high-risk orders. The first step is to analyze your shop orders. The order details page has a Shopify Fraud Analysis section with a list of indicators. These indicators highlight different behaviors based on different colored icons: Red, green or gray icons.

Let’s see the indication below:

  • Green – The order information is correct.
  • Red – The order information is found in fraudulent orders.
  • Gray – Provides detailed information about the order that may be useful.

Shopify fraud

Should You Fulfill High-Risk Orders on Shopify?

As an eCommerce business, you are always looking for ways to increase revenue and scale up your business. One of the best ways to do this is to fulfill high-risk orders on Shopify. However, you need to know some things before you make a decision to do this.

How can you discover a fraudulent and high-risk order on Shopify?

There are some critical strategies for detecting high-risk orders on Shopify.

Billing address & shipping address: If there is a significant red flag, It indicates a billing and shipping address mismatch. You should check those data points before accepting or declining a transaction.  This data could point to something more (the credit card number is stolen).

Changing the delivery address after placing an order: Packet redirection is one of the oldest tricks in the scammer’s book. Once the buyer has provided a new shipping address for a previously approved order, rescan for fraud. Make sure the new address still matches your valid purchase history. Are you in a logical geographic area? Would a phone number and email help?

A large order from a first-time visitor: First-time customers placing large orders usually alarm anti-fraud systems. Criminals are quick to act after testing stolen card numbers and confirming that the information matches. They steal as much money as quickly as possible before moving on to the next unsuspecting business.

Phone order: Scammers often target companies that allow phone orders because they don’t need to reveal personal information such as IP addresses. They trick merchants into fulfilling risky orders without the usual security algorithms and technical checks.

Multiple attempts to complete order: If a customer tries multiple credit cards, names, billing addresses, etc., the sense of fraud can get tingling.

What should you do if you receive a high-risk order?

If you find an order that you believe is fraudulent, please follow these steps:

  • Confirm your order details: Please review all order details before deciding to decline an order. Order details provide information about the customer and the items they have ordered.
  • Contacting customers: If you have any questions about orders, please get in touch with the customer.
  • Request for more information: If you still have questions about orders, you can require additional information from your customers.
  • Reject order: If we determine that the orders are fraudulent, you can cancel orders.

If you are confused about whether the order is fraudulent, you can cancel it. When you make a decision to hold the order, be sure to:

  • Inform the customers that their orders are on hold.
  • Please check your order regularly. This ensures that you never miss an order that needs fulfillment.
  • Fulfill an order: If you determine that the order is not fraudulent, we may fulfill your order.
  • To cancel the order: If you determine that an order is fraudulent, you can cancel the order and immediately refund the customer. 

These steps will help you avoid chargebacks and keep your store running smoothly.

Shopify Chargeback Protection

Shopify fraud

What is a Shopify Chargeback?

A chargeback occurs when your card issuer reverses the transaction and transfers funds from your account to the customer’s account.

Card issuers do this in response to customer disputes about orders.

A chargeback is a consumer protection mechanism against fraud and unscrupulous merchants.

For example, a chargeback is a safety net that can be used to recoup lost funds if a customer has been cheated or disapproved of a transaction.

Why do chargebacks happen?

A chargeback occurs when the credit card companies refund you for a purchase that has already been fulfilled. This can occur if the bank that issued your credit card determines that your order is fraudulent.

Fraudulent order is one of the reasons for chargebacks. Fraudulent orders can be caused by stolen credit cards, fake IDs, or other fraud. If the order is marked as high risk, it may be likely to be fraudulent.

There are some reasons for chargebacks. Let’s discover 4 main reasons following:

1. Customer disputes

There are a number of reasons that customers may dispute a transaction, such as:

  • The orders they ordered don’t arrive to them (or the goods aren’t available for pickup)
  • Customers receive the goods  but they are defective or damaged or don’t meet their specification
  • A service they ordered isn’t performed as their expectation
  • They don’t receive the credit that they expect

2. Fraud

If customers find a transaction being made by someone using their payment details illegitimately, they can report their transaction to their issuer as fraud.

A transaction reported as fraud sometimes can in fact be genuine. For example, the cardholder may not realize the transaction because the information of the merchant is not clear. Or maybe it is a case of familiar fraud (or first-party fraud). 

3. Processing errors

Merchants may make a mistake in a payment processing transaction. For example, they may accept a payment card that is expired or fails to get a card imprint

4. Authorization issues

Authorization issues typically happen when merchants try to circumvent or override a declined authorization. In effect, the issuer receives transactions for which authentication has not been obtained or transactions obtained using invalid or inaccurate transaction data.

How to prevent chargebacks?

If you find orders flagged as high risk by Shopify’s fraud analysis, you should review them carefully. You can request additional information from your customer: Billing Address or Phone Number. If you are still unsure, you can cancel the order and refund the customer.

You can also rely on the chargeback protection that Shopify offers merchants. Shopify also offers some of the best apps to protect your business from fraudulent orders, so you can focus on what really matters: running your store and selling!

There are some ways to prevent chargebacks:

  • Use rules  Strong Customer Authentication rules. 
  • Clarify your policy 
  • Confirm the customer’s order
  • Provide excellent customer services
  • Use a clear descriptor on customer statements. 
  • Delay billing. 
  • Obtain proof of customer participation. …
  • Cancel recurring transactions quickly.
  • Update outdated cards
  • Draw on your payment provider’s support

Conclusion

When you run an eCommerce store, you need to acknowledge the criticality of fraud. There is a built-in tool on Shopify to help you define Shopify fraud and they offer some tips on how to deal with them. This article shows you useful information about Shopify’s high-risk orders, so you can completely manage your business and limit the fraud as well as high-risk on Shopify.

If you have any questions, contact us. We are ONEXT DIGITAL– a software company with +15 years of experience in Web Development and working with multi-platform. Shopify is one of the most popular platforms that we work with and we have also succeeded in thousands of Shopify projects. We assure you that we will be your reliable partner to help you achieve the target rapidly