Credit cards either get stolen or lost, and chances are it can get into the possession of somebody with the wrong intentions in mind. Fraud happens when the credit cardholder has not authorised the transaction. As a merchant, this can get fairly costly for your business with high chargeback fees and loss of sales revenue.

prevent fraudulent transactions

But while there’s always a risk you’ll be vulnerable to fraudulent transactions. There are measures you can take to ensure it is kept to a minimum and where you can rest easy knowing your e-commerce website is for the most part safe.

In this post I want to highlight a few red flags you should be keeping an eye on.

1. Adding 3-D Secure

3-D Secure (Three-Domain Secure), is a security protocol to prevent fraud in online credit and debit card transactions. Offered by the credit schemes, it ensures the customer is actually the credit card holder by allowing them to assign a username and password to their card.

Transactions authorised through 3-D Secure have a liability shift, which in most cases means that you can avoid paying high chargeback fees from the credit card schemes.

By adding this extra layer of security, you not only protect your e-commerce store from fraud but can also ensure your customers are secure in case their credit card is used in fraudulent activity.

2. Review suspicious orders

Another way of preventing fraud on your e-commerce website is by keeping a close eye on anything suspicious. You know your business inside out, and that also means you know who your customers are and what their buying patterns are. If you notice an order that looks too good to be true, it’s generally a good idea to review anything out of the ordinary.

An example would be if you’re selling electronics, and then suddenly someone puts in an order for 20, 48” televisions. Sounds a bit suspicious, especially when people usually have just one television in their homes.

To help prevent fraudulent transactions from your store, be sure to look out for these warning signs:

  • Orders larger than normal
  • Requests to change the shipping address after the order has been paid
  • Unusually large quantity of international orders within a short period of time
  • Large number of orders all happening at an unusual time
  • Multiple orders from different customers shipped to the same address
  • Suspicious and fake email addresses
  • Suspicious shipping address like P.O. Boxes

3. Verifying order information

Whenever you come across suspicious orders you will want to ensure the order information is valid and checks out. The main things to keep an eye on is the shipping address and the contact details.

You can verify the shipping address by doing a simple search online to see where the address is located, and cross checking to see if it matches addresses for shipping companies and freight forwarders.

If the billing address and shipping address don’t match, and are located quite far apart, you might want to get in touch with the customer to confirm the order.

Call or email the customer to see how they reply to question about their order. A potential red flag is when the email bounces because it doesn’t exist and the phone number is not valid.

Please bear in mind that even when you take these measures, there’s still a chance of fraudulent activity happening on your e-commerce website. At PAYMILL we have 3-D Secure enabled by default for our merchants to help keep chargebacks under control. To find out more about our security features, check out the PAYMILL Security page



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Kostas Papageorgiou

Kostas specialises in content marketing and community management, who's focused on helping tech companies increase brand awareness and engagement to boost conversions.