Identifying the Signs of Online Fraud

Buying behavior is a key indicator in identifying fraudulent transactions from legitimate ones. Merchants can minimize risk and fraud by closely examining what their customers buy, the quantity and amount of their purchase, their payment method, and how their customers choose to have their orders delivered. Protect your business from risk and fraud by staying alert and examining order information that can give insight if an online credit card transaction is possibly fraudulent or legitimate.

PRODUCT ORDERS
  • Abnormally large volume order
    Fraudsters have a limited window of opportunity to use stolen credit cards as they do not last a long time. Before the original owners report their credit card as lost or compromised, fraudsters must use the card and max out the card’s credit limit in order to maximize the life span of the card.
  • Multiple orders of the same item
    By ordering multiple quantities of the same items, fraudsters are able to earn more profits by re-selling the items for a lower price.
  • Ordering “high-ticket” items
    Selling items at a lower price lowers a fraudster’s profits. However, buying and selling “high-ticket” items assures the fraudster that the item he is selling will be sold at a higher price, even if it is already discounted.
TRANSACTION FREQUENCY & CARD USAGE
  • Multiple transactions on a single card in a short time span
    Fraudsters do not concern themselves with how much they are going to pay since it is not their credit card in the first place. Their primary concern is to maximize the lifespan of the credit card so they purchase as many items as they can.
  • Multiple transactions on a single card but shipped to different addresses
    Fraudsters are often not alone in their misdeeds. The world of online fraud is vast and composed of underground forums where people buy and sell credit card information or gather to discuss “business”. Multiple orders on a single card shipped to different addresses may be evidence of an organized criminal activity.
  • Multiple cards used using a single IP address
    Multiple online credit card transactions made with different cards on a single IP address can be interpreted as an online fraudster sitting at his computer with a recently acquired batch of stolen cards and trying them out on a merchant’s store.
SHIPPING ARRANGEMENTS
  • Rushed or overnight shipping
    Fraudsters’ want to receive their goods as soon as possible and since they are not paying for the credit card, they do not mind paying the extra cost of rushed or overnight shipping.
  • Delivery address is different from billing address
    Most of the time, a person’s billing address is also the person’s home or office address. Unless the order is a gift for someone, there is a big chance that it is a fraudulent online transaction and must be examined closely.
  • Shipping to an address with transactions made using multiple cards
    Multiple transactions made using different credit cards and shipped to the same address is also similar to the scenario of a fraudster acquiring a new list of stolen credit cards and using multiple credit cards to buy in a single merchant. 

If any of these characteristics are present in an online transaction order, the merchant must examine it more closely. The more characteristics are present in a single order, the more likely that it is a fraudulent transaction. ePayAlert helps to detect and prevent fraud by examining credit card transactions online and in real-time for abnormal patterns and behavior and tagging the risk level of each transaction based on the following parameters:

  • Parameter Format Checking
  • Blacklist Control
  • Geographical Checking
  • Velocity Checking¬†
  • Transaction Limit Checking
  • Historical Negative Record Checking
  • Risk Scoring