“Hi! I’m, um, George. I’m from an obscure third-world country, and I’d like to buy ten of your most expensive laptops. Could you deliver them tomorrow and send me an invoice?”
Part of the problem with business fraud is that perpetrators don’t exactly wear name tags announcing it. And they are rarely as obvious about it as this person. But with the right best practices, it is possible to spot them more than you might think.
Recently we did another blog post about the various kinds of e-commerce fraud that are out there, looking at everything from identity theft to merchant fraud. Here, we want to cover what a lot of these fraudsters “look like” – in other words, what kind of clues they commonly leave behind, and how to smoke them out in your business.
Common telltale signs of fraudsters
Commercial fraud is a constant cat-and-mouse game, where criminals and business have to work hard and stay aware to keep one step ahead of the other. That said, there are several common red flags to look for in suspicious orders:
Their ID doesn’t match their IP. A great deal of e-commerce fraud originates from countries where scammers operate with impunity and enforcement is lax. Of course, this doesn’t mean that you want to refuse legitimate orders from customers in these countries. However, when someone places a domestic order originating from an IP address for one of these high-risk countries, it is often a red flag for further review.
Their contact data doesn’t check out. How does a fraudster in India get merchandise you are shipping to Indiana? Often the shipping address is an unsuspecting person who is duped into reshipping the merchandise – or a fake address that is later redirected with the shipping carrier. Likewise, scammers often use fake email addresses that don’t work, or phone numbers that are never answered.
Their credit isn’t credible. Ecommerce crooks often place orders using stolen credit card numbers that are easily purchased on the dark web. How do you know that a credit transaction is risky? Look for cues such as bank information that doesn’t match the fraudster’s location or phone number.
It’s a big order – OR a really small one. Of course, an expensive order from a brand-new customer is often cause for celebration but can also be of concern. In recent years, criminals have often learned to “test the waters” with small fraudulent orders over time, to become established as customers and test the waters for a larger sting.
The common denominator across all of these signs is that fraudsters hide in plain sight with bogus information, particularly contact information. And the best way not to get stung in the first place is to ensure that orders have accurate, genuine and up-to-date data, so you can flag suspicious ones for further review.
How you can fight back
How do you detect a fraudster? The best way is to have business rules that flag potentially sketchy customers and transactions – and then have tools that automate these checks across your entire volume of inbound orders.
Service Objects has a complete suite of tools for validating every aspect of a customer transaction including:
- Address validation, to ensure addresses are valid and deliverable
- Email validation, to check for bogus, random or suspicious email addresses
- Phone validation tools, to verify and geolocate phone number information
- IP validation, to see where a transaction originates from
- BIN validation, to provide credit card and bank details for a card number
For the very best protection against fraud, we offer bundled services that test and cross-reference your customer data against multiple data points, to provide a quantitative confidence score as well as flag specific concerns. Our DOTS Order Validation and DOTS Lead Validation products are designed to work seamlessly with customer or pre-sale contact information to provide a premium level of security and confidence.
Criminals are always testing business’ defenses to probe for weaknesses, and your goal is to have a hardened infrastructure that they move on from in favor of easier targets – particularly if you sell items that are high-ticket or easily converted to quick cash. Fraud will always be a fact of life in business, and ultimately the best way to protect yourself is to understand and manage what it “looks like” in your business.
Interested in learning more? Contact our fraud experts.