How can I block fraudulent orders in my online store?

[DRR-Michael]

Hi,

I need help. We need to know how do we block fraudulent orders or how do you set up our store to block fraudulent orders?

[Emily]

Hi, @DRR-Michael.

Thank you for reaching out! 

Shopify does have a built-in fraud analysis tool that helps you identify orders that could be fraudulent. The features available to you will depend on what plan you are on and if you use Shopify Payments. There isn't a way for the system to know every single fraudulent purchase, as some are impossible to identify. However, our fraud analysis tool does warn you, and you can decide if you want to gather more information from the customer or cancel the order altogether. There are various apps on our app store as well that I would be happy to recommend to you if you would like. Once I know what payment gateway you use and the plan you are on, I can provide you with more information. 

Please let me know if you have any further questions! I would love to learn more about your business. What type of products do you sell?

Talk soon, 

[JoesIdeas]

@DRR-Michael I've dealt with fraud orders as both a store owner and app developer making a solution. They're a pain, especially when you get hit with the chargeback.

I agree with Emily's assessment that it can be impossible to detect them, but the fraud analysis from Shopify is a great tool.

I did an analysis on multiple stores and found that 20% - 30% of high risk orders result in chargebacks. By cancelling these high risk orders you can prevent chargebacks. In my experience, medium risk or low risk rarely result in a chargeback.

Based on that, here's the system I've implemented:

1) If you get a high risk order, stop fulfillment and investigate it (or just cancel it if it happens a lot or you want to be extra cautious).

If you want to automatically cancel high risk orders, or get an email notification on medium or high risk orders, the free version of Order Automator app does that for you.

2) If you want to investigate the order, email the customer and politely let them know that your fraud detection system flagged their order. I've seen stores use various tactics here to determine fraud, for example you can ask the customer to take a selfie while holding up their ID, and also ask any questions about something you see in the order (like if their shipping country is different than billing country, for example). You could also ask for an acknowledgement in the email that this is a legit order, and that you waive the right to file a chargeback with the bank.

Those things don't guarantee you'll win the chargeback case (sadly credit card banks usually side with the merchant, but not always, I've seen chargebacks won)... but the more evidence you have the more you can present if you get hit with a chargeback.

And by asking questions and getting a dialogue, sometimes you can get a feel for whether the person is a scammer or a legit customer.

I work with some stores that just automatically cancel all high risk orders, because of high volume and not wanting to deal with the hassle. I recommend experimenting by communicating with those customers (either email or on the phone), and then forming a system for your team to follow based on the results.

[myra24]

Hi @DRR-Michael ,

You can use the built-in fraud analysis tool in Shopify to identify and block fraudulent orders. This is a simple and great tool to help you investigate and review suspicious orders before it is too late. 

To add on a layer of security, you can install this free third-party fraud prevention app from the Shopify marketplace too. It can detect and stop high-risk fraud orders, and provides validation rules customization based on your business needs.

Hope it helps.