Last night I received an order that was flagged "High Risk Of Fraud". The fraud analysis states that billing address does not match credit card registered address. Also, there was no CVV code. I didn't know that Shopify would let an order through without a CVV code. I called the phone number on the order and did get in touch with the customer. He verified his email address and shipping address. We had a tough time communicating as he didn't speak much English and I speak very little Spanish. But, his phone number on the order did connect me to him. We then communicated via Email. He verified his shipping address and gave me his billing address, but I don't see where Shopify provides billing address to me to verify. His shipping address is a box in Florida, which is also where he works. I'm unclear on if it is safe to ship the product to him, and unclear on what if any other steps I should take. To me, it seems legit. Since Shopify let the order through (I had my shop set to automatic capture of payments) is there anything I can do other than wait for payment and see if there is a chargeback? What is the amount of time that I need to be concerned about a chargeback?
Thank you for any help!
I am no expert but have used shopify for many years and dealt with this exact situation many times. Obviously this is my opinion and I'm not saying you have to do this, but I have found that just cancelling the order and cutting your potential losses is the simpler way to go. Most often these types of risky transactions have resulted in chargebacks, especially since there was no CCV included. I would just refund and run at this point. If he wants to reorder tell him to use a different card that is verifiable.
Thanks so much for your reply and advice. I very much appreciate it. I guess I'm feeling like it might be legit since I was able to get hold of him via the phone number he provided at checkout and he confirmed everything, but perhaps I'm being naive. Have you had charge backs in these situations or have you always cancelled the order before that could happen. I'm wondering what the time limit is for a charge back too. Have you dealt with that?
Thanks again for taking the time to reply. I really appreciate it.
Just the other day, I wrote a response regarding Shopify's Risk system.
I've copied it and pasted it below for your reference:
Shopify has two classes of fraud risk checks. Medium (Orange) and High (Red). This looks to be a high-risk (red) notification. Shopify does not exactly publish why an order is flagged as fraud, but treat it as a red warning flag.
Shopify mentions that "Fraud recommendations are powered by machine learning algorithms that are trained on historical transactions across all Shopify stores. The recommendations give you the benefit of years of fraud detection experience. Shopify continuously improves these algorithms to better identify fraudulent orders."
Keep in mind that Shopify's system is not 100 full proof accurate as the system is known to miss classify orders. The best way to protect yourself is to be knowledgeable about your typical customer profile and demographic.
@EarthChunks is also correct in the simpler method is to just cancel the order and move on especially for higher valued items. I also recommend you start to educate yourself on future potential fraud orders especially when you start growing. You will encounter more frequent high-risk transactions as well as lose money from a chargeback claim. Call your payment gateway providers and hear what they say about chargebacks and how to further protect your business for future chargebacks.
Consider reading the following article that I previously wrote to learn what additional things to look out for.
Thanks so much for all of this information. Super helpful!!
I have one question that you might be able to help with. Since I had my shop set for automatic payment capture, the payment went through without my having a chance to cancel the order first. So, if I cancel the order now, how do I refund the money if I have not yet received the Payout from Shopify. So, I don't actually have the funds in my account yet. Should I wait for the payout to cancel the order and give the refund?
Thanks so much for your help!
You're welcome! @Cathy_Enright
I'm guessing you might be using Shopify Pay as your payment provider based on your information. If so, you don't need to wait until Shopify pays you. You can just cancel the order without worry. So, even if there was a case of a chargeback, you won't get hit with chargeback fees and such. Shopify's payment system is designed to cancel and refund the customer as quickly as possible.
Go into the customer order page and select "cancel" order under "More Action". This option should cancel and refund the order automatically.