As a business owner of an ecommerce product, it’s important to you to know who you’re selling to. Why? Because not only can scammers cost you money, but you can get into legal trouble if you fail to perform your due diligence by verifying your customers. Here are five ways to detect and prevent online fraud.

Detect Online Fraud

  1. Verify Identities

    In general, you want to make sure that the person who is purchasing your product is in fact a person and not a robot. These types of fraud will cost you money but won’t leave you in legal jeopardy. However, some people who are looking to buy certain products are scammers or criminals who mean you or others harm. It’s important to verify that your customers are who they say they are so that you can prevent fraudsters from stealing identities or credit card information from your customers and making your company look bad.

  2. Look at Locations

    Sometimes, a legitimate purchase may look shifty because the purchaser is sending a gift to a friend or relative who lives elsewhere. However, purchases that have a billing address in one location and a shipping address in another, especially if the order is very large or if the address is some sort of freight company, could indicate fraud. This might be an easy thing to look out for if you’re a very small company, but larger companies need to use a data service like this one here that employs address verification services to help with this process.

  3. Use Social Media

    Most people have social media accounts on various platforms. One way that you can verify the legitimacy of an online purchaser is to simply look them up on a search engine or social media platform. This type of search can be a bit time consuming so it isn’t necessary to do it for every purchase. However, if something doesn’t sit right with you, it might be possible to find public records and other information about the purchaser before completing the order.

  4. Watch for Red Flags

    Multiple attempted orders for the exact same item and exact same quantity of that item that failed because a card was rejected is a red flag for fraud. Sure, a legitimate customer could mistype their credit card number a time or two (especially when making a purchase on a phone), but more attempts are likely an indicator of fraud. Be vigilant with email addresses as well. A data verification system can help by showing the length of time that an email address has been open. Free email accounts are easy to open fraudulently, so an address that has only been in use for a day or two is higher risk than a free email account that has been open for a number of years.

  5. Use a Service

    People committing online fraud are getting more and more adept at their scams. Due to the prevalence of online transactions, they have plenty of opportunities to practise and adapt when they get blocked. A data verification service is an important tool that can help you verify each transaction before it is completed. Looking for red flags, searching clients, and verifying addresses are great ways to prevent fraud, but they are time consuming. Employing a service that can streamline that process for you and that has access to multiple other data verification points provides peace of mind and allows you to focus on other aspects of your business.

    Detecting online fraud can be a full-time job. Fraudsters are getting more and more skilled at duping business owners and customers, making online shopping stressful. By staying vigilant to who is buying your product and where it is going, you protect yourself and your customers.

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