Fraudulent eCommerce card transactions often display characteristics that are proved to be reliable indicators of potential fraud. As is the case with many other transactions processed in a card-not-present environment, eCommerce card transactions are a target of an array of fraudulent operations. Following is a list of potential fraud characteristics that you will need to take into account when determining the validity of online transactions. Usually, if an eCommerce card transaction includes just one of these characteristics, it is probably completely legitimate. If, however, there are several characteristics present in a single transaction, this is a strong indicator of fraud.
- First-Time Shopper. Most merchants will want to have as many first-time shoppers as possible in order to grow their businesses. Unfortunately, the same goal is shared by criminals. Once they commit a fraud with one account, they usually move on to another.
- Unusually Large Orders. Fraudsters know that they can only use a stolen card for a limited amount of time and will attempt to take full advantage of whatever time they have.
- Orders for Multiple Items of the Same Kind. Related to the previous indicator, fraudsters will try to maximize the use of the stolen cards and that may be expressed as purchasing several items of the same kind.
- Big-Ticket Item Orders. Big-ticket items have larger resale value than smaller-ticket ones which makes them attractive to fraudsters.
- Express or Overnight Delivery. Fraudsters do not pay attention to shipping charges, as they do not pay for them. What they need is the merchandise, as soon as possible.
- Orders from Internet Addresses at Free E-Mail Services. These services have no billing relationships with their users, which in turn means no audit trail or verification that a legitimate cardholder has opened the account.
- International Orders. International orders make up a significant share of all fraudulent transactions. Fraud prevention services like Address Verification Services (AVS) do not work in much of the world, leaving merchants with no way to verify the authenticity of the cardholder.
- Transactions on Similar Account Numbers. There is software available out there that generates card account numbers and often these numbers are similar to one another.
- Orders Made on Multiple Cards but Shipped to a Single Address. Related to the previous point, if a fraudster is using software to generate account numbers, they might use several of them in one store.
- Multiple Transactions on One Card over a Very Short Period of Time. A strong indicator that someone is trying to max out a card.
- Multiple Shipping Addresses. If one or multiple cards with the same billing address are used in orders with multiple shipping addresses, this could indicate an organized fraudulent activity.
- Multiple Cards from a Single IP Address. If multiple orders are placed using different cards with different names and addresses, but are coming from the same IP address, this might be an indicator of fraud as well.
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