3 Telltale Signs an Online Order is Fraudulent


Online fraud affects businesses of all sizes. According to The Nilson Report, in 2012, payment card issuers, merchants, and their acquiring banks lost over $11 billion to fraud. Whether you’ve already been hit by fraudulent orders or are concerned about the potential, online fraud prevention is a must. One of the best ways to prevent online fraud is to be aware of the following three telltale signs that an order is fraudulent. This awareness allows you to stop that transaction from taking place or implement other security measures.

The IP address of the customer does not match the shipping or billing address entered or the IP address is from a high-risk country

When users browse websites, their IP addresses provide valuable clues as to their physical locations. A quick IP address lookup can tell you which city or country an online customer is located in. If that location does not match the shipping or billing address, it could indicate online fraud. In addition, several countries such as Russia, Malaysia, and Ghana, are notorious countries of origin for many online fraudulent orders. If a customer’s IP address is from one of these high-risk countries, the order could be fraudulent. What if the IP address is cloaked or it’s obvious that the user is using some sort of proxy? While many computer users use proxies for legitimate purposes, a cloaked IP address is another red flag to be aware of.

BIN of the payment card indicates a country of origin that is inconsistent with where the customer says he/she is located

A Bank Identification Number (BIN) is a prefix on a credit card which identifies the issuing bank’s name, payment method, card type, and issuing country. If the BIN’s country of origin does not match the customer’s location, it could be a strong indicator that the order is fraudulent.

Infidelity between the phone number owner and billing name

Another clue involves a mismatch between the billing name on a credit card and the customer’s entered phone number. For example, if the customer says his name is Bob Smith and uses Bob Smith’s credit card but enters a phone number that is not owned by Bob Smith, this could indicate online fraud.

Looking up IP addresses, BIN numbers, and phone numbers for each transaction is an effective means of online fraud prevention. However, doing it manually is generally not an option. Fortunately, DOTS Order Validation, which combines multiple DOTS services, automatically cross-validates customer information in real time at the point of purchase. DOTS Order Validation can instantly flag these telltale warning signs (and many others) so that you can prevent fraudulent orders from occurring.


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