Fraud for eCommerce startups

Posted by Trustev editor on July 17, 2013

There are lots of headaches in a startup. Fraud management shouldn't be one of them.

So you've decided to start an online business. You've got this great idea, built a small team, built a website and a store, and now all you've got to do is get the message out and sell like hell. There are never enough hours in the day, but work hard and get your SEO/Marketing right and you'll sell lots and fill that bank account of yours with hard earned dosh! Sadly this isn’t the way the real world works.

Nowadays there are more and more cases of online fraud due to more fraudsters and scammers online who'll be out to steal your product, service, or just plain hard cash from you from the moment you start selling. And it's getting increasingly difficult to stop them as they're becoming more and creative in the ways they hide who they really are.

One of the big challenges here is that the online fraud management tools that have been traditionally used to prevent this sort of activity are expensive and realistically only available to medium or large enterprises because of high minimum monthly costs and long integration cycles. Other tools inject layers upon layers of bureaucracy into the checkout process destroying customer conversions by up to 50% and generally making the whole shopping experience cumbersome and unpleasant for customers.

Some immediate warning signs that are pretty much common sense and simple to keep an eye out for;

First Timers – the first time you see new activity from a new customer may be your first and only chance to protect yourself, as fraudsters are usual not repeat offenders; they hit and move on. Have a system in place to monitor the first few orders from any customer, which makes good sense from a customer service perspective as well.

Small orders, followed by large orders – often Fraudsters will test your defenses with a small purchase. If this is successful then their real damage begins. It’s worth keeping an eye out for the patterns in multiple purchases over a short period of time.

Larger than normal orders or multiple orders of same item - large orders are the quick and easy win for fraudsters so they often aim for high value items that will provide for a better return when sold on. Multiple orders for the same item can also be another warning sign that the buyer is buying to resell.

Overnight shipping - fraudsters don’t care about shipping costs; it’s not their money. They want the items delivered ASAP to minimize their chances of being caught. The faster they can get the items in their hands the better.

Unusual Shipping addresses – fraudsters usually use a variety of options like PO Boxes to hide their true address. A simple Google or Google Maps check of a suspicious address can often give you a whole lot of information on which to base a decision.

At Trustev, we're changing the way that online merchants identify their customers in real time, using a unique platform that compares social data where available, with a whole host of information about the customer from their online browsing session. We’re giving all small businesses the opportunity to access advanced identity verification and fraud management technologies that were previously only available for large enterprises who could afford them.

Simple, easy to integrate fraud protection for all, making shopping and sharing safer and more secure for all. We're here to help you know who you're doing business with.

Topics: fraud