Preventing fraud is easy with the right tools and preemptive measures in place. The latest version of our Orders table allows you to see the payment information for orders paid by card.

This new feature will help you to make informed decisions when reviewing orders and will better equip you against fraudsters.

Step 1: Recognizing fraud

Fraud comes in different forms. The most common one experienced by e-commerce sellers is Card Not Present (CNP) fraud: this is when a fraudsters buy stolen info off the deep dark web and use it to place an order. In this case, the real cardholder can file a chargeback, or a dispute. The person who wins the dispute will be credited the order amount. Let's illustrate this with a case study.

  • Coco Carl is a new customer and an initial fraud suspect because their CVC (Card Verification Code, or the three-digit security code) check failed.

  • Is Coco Carl a fraudster or did he simply key in the wrong CVC? Before reporting them to us, it's best to examine their other information. The more information, the better.

Besides a failed CVC check, here are some other red flags to look out for (in no particular order):

  1. The customer is a new/first-time buyer and makes a higher than average purchase (e.g. your products range from $5-$15 but you see a first-time customer make a purchase of $280.)

  2. The customer's e-mail and cardholder name aren’t similar. Also look out for spammy e-mail addresses.

  3. The customer's Card Country doesn’t match the Billing Country.

  4. The customer lists an unexpected shipping location: this includes a vague, unverified, or sketchy shipping address.

    Tip: Google Maps is your friend. Use it to verify the provided shipping address.

  5. The customer orders a large quantity of the same product in different variations.

  6. The customer makes a rush order.

  7. The customer doesn't have a social footprint or there are too many search results for their name.

  8. The customer's mobile number cannot be reached, i.e. at they do not reply to any of your SMS or calls.

    Tip: At this point, it's time to give them a call.

The verdict? Coco Carl is most likely a fraudulent customer since he raised all of the red flags above. It's important to note that the presence of one red flag does not automatically make a fraud case. Rather, it's vital to examine all the other information provided by the customer. The more red flags, the more likely it is that the transaction is fraudulent.

Step 2: Verifying fraud

Ultimately, the best way to verify your customer's card payment is by asking them to verify their identity:

Take note: the name on the ID and card should match.

  1. For orders fulfilled via pick-up — ask your new customer to present the card they used to pay for the order and a valid ID.

  2. For orders fulfilled via courier — ask your new customer to submit the following:

    1. A video of the card used to pay for the order clearly showing the cardholder name and the last 4 digits of the card number

    2. A video of a valid ID

    3. A selfie with the provided valid ID (text must be clear and readable)

Step 3: Refunding fraudulent orders

If your customer fails the identity check (or if you have any concerns regarding a payment), we recommend you refund the order immediately from your dashboard to avoid chargebacks, or customer disputes.

Please report any incidents or suspicious activity to us as soon as possible so our Finance & Risk team can take appropriate action. The safety and security of our Cococart community matters to us.

Step 4: Preempting fraud

Another way to prevent fraud is by adding simple preemptive measures to your order fulfillment process:

  1. Ask for your new customer’s social media account. You may do this by adding a custom question.

  2. Fulfill orders from new customers after 24-48 hours. This allows you enough time to review an order or see if anything suspicious comes up.

  3. Call your new customer to confirm their order. This will verify the the mobile number they provided is valid.

Remember: the responsibility of recognizing and taking action against fraud ultimately lies on the seller.

That's it! Following the guidelines listed in this article can help you keep an informed and watchful eye on fraudsters.

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