How to deal with a Medium Fraud Risk order?

Payments + Shipping & Fulfilment
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Hello everyone,

It’s my first month beginning the online business, and today comes my second order; I’m so excited!

However, I noticed that the order was marked as medium fraud risk order; the analysis result said as below:

  1. Some characteristics of this order are similar to fraudulent orders observed in the past

  2. Location of the IP address used to place the order isn’t available

then I googled the customer’s email address, and it showed nothing bad, and the social profile of the email address was the same person/at least the same name as the customer. After that, I also checked the IP address; it was the same area as the shipping and billing address, which seemed no problem at all.

I understand that I’d better contact the customer to verify their information, but I really concerned that if I contacted the customer, he would cancel the order. In this case, should I proceed to fulfill the order?

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Do not make bets you cannot afford.

All these things are metrics and none of them are guarantees you will not lose money.

In risk management when a verification follow-up results in an order being immediately cancelled that is a good thing.

If a customer cannot respect your attempts to make sure their information is not being used improperly that is not a customer that’s a support issue waiting to happen.

If you do this for the next five years with 1 in 2 orders needing a verification followup pick one:

  • fret over each one
  • just do the follow up
  • cancel the order
  • setup automation to cancel any risky orders

DO NOT fulfill an order If you cannot risk the cost of lost time, product inventory , and chargeback fees. With the additional possibility of getting involved with annoyed person whos information was used improperly and had no idea any of this was going on until their payment handler notified.

If it goes bad those are all multipliers that can affect your business productivity for some time.

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Thanks, Paul,

And may I ask for your advice on what I should do next if I successfully collect the customer’s verification information?

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Hi @RosieLuo Jason here with Beacon.

It’s really up to you to decide to fulfill the order or not. Each case presents itself differently and there is no single flow to prevent a chargeback. Ask yourself, if you are okay losing the money if this turns out that it is a fraud order. If not, then simply cancel the order and move on. If a chargeback does comeback, you will need to learn from this and prevent similar instance from happening in the future.

With this said, verifying a customer will decrease the likelihood of a fraudulent order dramatically.

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@RosieLuo I agree with Paul about verifying the order and not risking if you can’t afford too, or if it’s a high value order (if it’s a high value order you may want to enforce a different form of payment, since credit card companies always side with the customer instead of supporting the business).

I used to run an ecommerce shop and fraudulent orders were a paaaaain.

We had our support staff follow up with the customer and use various methods (Depending on the situation, but I think it evolved to asking about the order, requesting a picture of their driver’s license to match with the name, and verify in writing / email that the customer agrees they are purchasing this item legitimately, and waives their right to a return or file a charge back).

In the end it’s the bank’s decision, and they almost always side with the customer, but if you can gather evidence like above it may help your case.

Explain to the customer something like (in the tone of your brand) that you know this is annoying, but this is just to protect your shop, because often times when the fraud system is tripped it’s a scam attempt that costs your business money.

Some people will say they’re not comfortable with it, then you can try and ask for other verification (maybe a phone call, for example), or you can just try to feel them out and determine what you think is legit or not. Most people will understand if you explain that there are bad people out there that try to hurt your business, and this is necessary.

I now run an app where 1 of the features helps prevent fraud / chargebacks (Order Automator, the fraud feature is free to use). You can use the app to notify staff of high or medium risk orders, or even cancel the orders (some people get a lot of fraud attempts and choose to have high risk orders auto cancelled and prevent any hassle).

We did an analysis on multiple stores and found that 20% - 30% of high risk orders result in chargebacks, but medium risk orders rarely result in chargebacks. What we did with my old shop (it’s still active, just not with me any more), is allow all medium risk orders, until 1 resulted in a chargeback. Never happened so they only focused on high risk orders.

Fraud sucks! Hope this helps at least a little bit!

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