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Cyber-criminals are just like the shoplifters retailers deal with on a day to day basis in their physical stores. They take advantage of crowds and low staffing levels in the hopes of slipping through your e-commerce stores virtual cracks.

While most online retailers will be ramping up their shipping staff to pack and pick their Black Friday weekend sales, they should not neglect a bit of additional manual oversight on fraud prevention.

There are many fraud prevention tools at your disposal.

  1.   CVV: This is the lowest level of protection and everyone should be using it.
  2. Verified by Visa/Mastercard Secure Code: (VBV/MCSC) This does shift some liability for fraud off the merchant but because of low adoption and a largely negative impact on conversion rates, it is not an ideal solution.
  3. AVS: This is good in theory but depending on how you implement it, it can cost you more sales than the fraud it prevents.
    a. AVS is not used consistently in all regions. While it is pretty good in the United States, it is less useful in Canada or Europe.
    b. AVS is not used/supported by all financial institutions
    c. AVS returns a handful of codes depending on whether the match was exact, partial, not at all, or unable to be determined. If you set it to only authorize exact matches, then a significant portion of your orders will fail. When we implement AVS we usually use it as a secondary fraud signal and leave it up to a merchant to decide if they want to be concerned.
  4. Velocity/Behaviour controls: These may be part of your e-commerce platform or can be implemented through third party vendors that specialize in fraud prevention. CommerceCM has a setting that let’s us limit the number of failed attempts a shopper is allowed in a specific time period. Other controls could be based on the geo-location of the users IP address vs the billing and shipping address they are using. We have also created custom business rules to flag orders that do not match predefined patterns (multiple units of identical products, large orders, etc.)
  5. Humans: Humans have great BS detectors and for most merchants are the last line of defense. Large orders going to new shoppers in unfamiliar locations are just as much a cause for skepticism as they are for celebration. Google is a great tool to prevent fraud. Does the person exist? Does the address exist and is it appropriate for the orders? You can also call the customer just to “confirm details” and see if they seem ok. This will obviously affect your staffing levels over the crucial holiday period, but is just as important as ramping up the team in the warehouse. Why ship more product if you aren’t going to get paid.

We also recommend that all of our customers include in their terms and conditions that they reserve the right to refuse to fulfill any orders and will refund the full amount. This has the added benefit of protecting you from pricing errors.

Do you have any other tips to help reduce fraud?

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