* Episode Notes

* Automated fraud checking services

* Signifyd - https://www.signifyd.com/ 

* Riskified - https://www.riskified.com/

* Episode Transcript

Hello. Welcome to the Business of eCommerce. I'm your host, Charles Palleschi and this is episode four. On today's episode, I'd like to talk a bit about ways to prevent fraudulent charges.

If you've been around for a while in eCommerce if you run your own eCommerce sight, not so much if you're selling on Amazon or Ebay but if you actually run your own independent site everyone falls victim at some point to fraudulent charges. This is where somebody has made a purchase on your site using a credit card, which is not theirs. They've received product or maybe not received product, but they've made a purchase on your site and you've charged their credit card. And then at some point months down the road you may have got a chargeback and that showed this charge was fraud, it actually was a chargeback from somebody else, it was not the card, the names didn't match and essentially what happens in that case is you as the retailer you basically lose. And you have to give the money back. You lose the product. You also get hit with a chargeback fee. It ends up costing you not just the amount for the order but also then a chargeback fee on top of that. It also isn't good for your merchant account. This is definitely something you don't want to happen.

If you've been around for a while it's happened to all of us. And when it happens it's not good, but there are some ways to prevent it and I'd kind of like to run through those real quick. Just some things I've personally found that work, that help, and that might help you. The first thing is just some basic, basic, basic human monitoring on the orders that come in. If you're around for a little bit you've seen orders come in, you start to know my average order price is x, let's just say $200 is an average order. And you're able to then say, "Any order above five times that," let's say a $1,000 or even $500, just put a number on there. If it's above x you know there's some risk involved. This is a bit different it's outside our norm, doesn't mean its fraud it just means it's just outside the average order.

What I personally have done is come up with a couple criteria and then had somebody ... in my case it was a virtual assistant monitor every order, every day if they meet two out of the three criteria, bring these orders to my attention immediately. And they came in every day at a certain time, I think it was 4pm Eastern, before orders were getting shipped, that sort of thing. It was kind of just like this check of saying, "Let's just have some human's eyes on this and see if this order makes sense. And if it doesn't raise it to my attention." And then I did a little more forensics and ... I'll get into that. First average order volume, that's something I always have them check. If it was above an excepted number ... and these are all numbers you kind of play with after a while, then that's one strike in the column.

Second on the list was the billing and shipped address to do not match. Again, it happens all the time but if they don't match on a $10 order it's very different then if they don't match on a $1,000 order. THat's just something you want to keep in mind. And if you have an order that's both high value and the shipping addresses don't match now you start to get into some sort of territory where this order just looks different, and it's something you want to then start really looking a little more into.

Next is ... let's say these don't match. Usually sending a quick email to the email address you'll see that it bounces back.