Massive Fraud through PayPal (Phishing). What Shopify/PayPal is planning to do about that?

[RayBan81]

Since start of our Shop in April 2020 we used PayPal as a rather save way to collect payments. Our overall chargeback rate was way below 1% with PayPal. However, this started to change in January, when we got struck by a massive amount of fraudulent orders through PayPal. All chargebacks were due to "Unauthorized Transaction". As we are selling digital products fulfillment happens instantly and the damage is done right away. We decided to pause PayPal for 2 weeks. Even if Shopify Risk Rating recognized many of the fraud purchases and we did not capture/fulfill, around 25% still slipped. Most of them were covered under PayPal Seller Protection, but it's just a headache to deal with Chargebacks and of course we do not want our product to be used by fraudsters.

After that 2 week pause we activated PayPal again, but within a few days the fraudulent purchases struck us again...this time the fraud orders were flowing in 90% from Canadian PayPal accounts and our Licenses then re-sold in Chinese Forum and ebay-clone sites. So again...we removed PayPal from our Shop. 

I get the impression PayPal just has a huge phishing issue which is not going to stop any time soon. We'd like to use PayPal as it's massively popular among our customer base, but currently there is no idea how to stop fraud-orders flowing in through that route. Unfortunately the Shopify/PayPal integration lacks any options to help tackle such issues...it's just ON/OFF afaik?

Happy to hear from other merchants or Shopify itself on that issue! I'm sure we're not the only ones struck by the Fraudsters.

- Ray  

[cybertonica]

Hello RayBan81,

You’re definitely right - you’re not the only person struck by fraudsters! I’m sorry to hear that you’re experiencing many chargebacks in your store and we understand that this is time consuming and costly to your business. You mentioned that fulfillment happens straight away in your store, which seems to be attracting fraudsters. I recommend adding an extra layer of fraud management in addition to Shopify’s risk rating score. 

Try our eComm360 Fraud Prevention App for 30 days on the Shopify marketplace for free to reduce pesky chargebacks and fraud losses. eComm360 allows you to choose whether to approve or deny an order, before fulfilling it to provide you with a transparent order protection process. And you’re encouraged to set your risk range so that riskier orders are automatically denied, before chargebacks occur. 

Feel free to reach out to hello@cybertonica.com, and we’ll be glad to offer any assistance to protect your business against fraud risk. 

Kind Regards,

Naz from eComm360

Combining real-time threat intelligence and order monitoring to prevent fraudulent orders with eComm360. 

https://apps.shopify.com/ecomm360-fraud-prevention

[RayBan81]

We do have that layer. We use Shopifys own risk rating (which is per our testing far superior to other solutions) and Mesa to stop capturing when there is an elevated risk. This works very good in most cases, but when there is again a massive Phishing spree going on with PayPal we get dozens of fraud orders in short time and they (partly) slip through Shopify. However, the last 2 weeks are quiet....PayPal is active again and they seem to have cleared the afftected accounts.

However, it's just about time PayPal is requiring customers to enable 2-Factor. 

[vdikhtiaruk]

You can use 3P ‑ Your Paypal Protection to avoid orders from stolen PayPals. The app is created to verify if customer used the same email account in PayPal as he has in your store.