What are Common Signs of Online Fraud?

November 17, 2022/ Jarrod Wright /

Fraud is a threat to all merchants. However, some businesses in the card-not-present (CNP) space are more vulnerable to fraud than their brick-and-mortar counterparts.

In fact, recent studies show that fraud is rising at a faster rate than anyone expected. The number of global online fraud attempts rose 46% year-over-year in 2021. To make matters worse, the US is the reported source of more than one-third of card fraud losses.

This can partly be attributed to the impact of Covid-19 on consumer shopping patterns. However, it also reflects a trend that was already established years before the pandemic.

The best way to stop online fraud is to prevent it whenever possible. To that end, we’ve comprised a list of the top 5 red flags to watch out for, and how to respond to each.

The Top 5 Signs of Online Fraud

To prevent online fraud, it’s important to recognize the signs before it’s too late. There are literally dozens of fraud indicators that could help consumers and merchants identify fraud. Today, though, we want to highlight five of the most common issues, and how they influence fraud.

1. New Customers

It’s crucial to pay close attention to first-time buyers. While gaining new customers is important, fraudsters are always on the lookout for a new, easy victim to target. If you get a new customer that behaves strangely, monitor and track their transactions closely. You may also want to submit them to more rigorous screening than you would use for a regular customer.

2. Super-Sized Orders

If you begin receiving orders that are significantly larger than your average transaction value, you should monitor that transaction closely. You may even want to put it on hold until you’ve verified the customer through additional processes. Criminals using stolen card data know they have a limited time to spend as much as possible before the card is reported stolen.

3. Order-Bombing

Receiving repetitive small or middling purchases from one account, sometimes duplicates of the same item in a plethora of colors and sizes or similar, is a major indicator of fraud. The way to handle this is to set velocity limits, and put a temporary freeze on orders from any card or user that raises suspicion. Ask the user to verify themselves through additional practices (2-factor authentication, for example). You could possibly even set hard spending limits per customer.

4. Different Cards, Same Address (or Vice-Versa)

Here is where an extra eye on orders really comes in handy. Any use of a credit or debit card that does not match information on file should immediately be paused until additional verification is achieved. Other instances that could be fishy are different card numbers on the same IP address, same address but different names, etc. If the shipping address doesn’t match the information the card user has on file with the card network, it should raise a red flag.

5. Problems Identifying Personal Information

Lastly, if at any time during the verification or transaction process, a customer cannot identify the personal information they have on file with you or the bank, decline or pause the transaction pending further verification.

Exercise Your Best Judgment

Keep in mind: not every one of these is guaranteed evidence of fraud.

While people are human and accidents do happen, it is in everyone’s best interest to take the extra time to authenticate transactions. It is true that false declines can complicate the customer experience. But, in the end, it’s generally better to lose one sale than to put your business and customers at risk.

Last Update: November 17, 2022