Every year, Shopify breaks its personal records regarding revenue and user base. Shopify is considered one of the biggest eCommerce platforms in the world. This platform makes it easier for people to put their business on the internet or create an online store from scratch.
However, just like in every other field, there is a large chance that a minority of people will try to abuse the shortcomings of a platform in their favor. Fraud can be a one-time thing, or it can happen for weeks or months.
Shopify also offers things like fraud analysis and other protection measures, but there is much more that you can do to protect yourself. By understanding the bits and pieces of high-risk orders, you can detect frauds early on and protect yourself and your business.
What are high-risk orders on Shopify?
Since Shopify’s user base is huge, they need to lower the chances of their users and their customers getting scammed. To realize this, Shopify is marking certain orders as “High-risk” with the intention of protecting online businesses from potential fraud.
As someone who runs the shop, you will have the choice to accept these orders or decline them. Before accepting them, you should take multiple steps to analyze the order and decide whether the order is actually a fraud.
If you accept, and the said order was made through a stolen card, or if this order leads to a chargeback, in any case, you will have to deal with multiple problems. Chargebacks can cost up to 260% of the price of the item or items ordered.
If the card was stolen, you would have to pay extra admin fees or go through a dispute. Chargeback disputes are very time and energy-consuming and depend on the products’ price. You might want to avoid them.
The largest card networks in the world, such as Visa, Mastercard, or American Express, have the power the penalize the firm whose transactions often lead to a chargeback. This penalty can manifest through them either increasing your transaction fees or completely blocking your store for future transactions.
High-Risk orders marking system
It would be impossible to analyze each transaction and then evaluate it manually. That’s why Shopify utilizes complex machine learning software that analyzes each order and identifies those that carry risk.
This software doesn’t always give a detailed analysis of the high-risk order you encounter. Some reasons can be pretty vague. However, this algorithm utilizes millions of transactions as the basis for this judgment.
That’s why you should analyze each order manually. Some orders can be rejected by glancing at them. For others, you should investigate multiple points.
How to spot fraudulent orders?
Shopify does automatic fraud analysis and delivers all the facts that indicate fraudulent or legitimate activities. Based on their algorithm, Shopify will give you a detailed analysis of all the data the user left during the payment process.
However, this detailed analysis is based on their previous transactions and data, and they will be much more suspicious than they should since this also proposes a risk for Shopify.
You can easily spot fraudulent orders by using one of the mentioned ways, but the most apparent frauds will use fake or stupid names, fake numbers, and fake emails, which you can spot in a moment.
In the end, Shopify will give you their recommendation and conclusion regarding the order. There are three classifications of fraud analysis, low, medium, and high. This risk is classified based on how similar fraudulent behavior leads to chargebacks.
You can lose money by being too cautious or not being careful. By declining every low-risk order without adequately analyzing it, you will be losing customers, while by accepting them, you can lose money through the chargeback process.
Ways to deal with high-risk orders on Shopify
Shopify’s fraud detection and prevention will do the majority of the work for you. However, you can always go a step further and analyze the orders manually.
1. Calling the phone number on the order
Each customer needs to leave their phone number in the form before ordering something from a Shopify store. You can see that some phone numbers are fake if they repeat the same number, for example, or have some patterns.
You can manually try calling the number left in the form, or you can use software such as 411.com to check whether the phone number matches the area of the customer. If you get an invalid number response, you are dealing with fraud.
However, if the person picks up the phone, you can check the order’s legitimacy directly.
2. Verifying the IP address
Verifying the IP address of the order can be done relatively quickly. Multiple internet tools such as WhatIsMyIP will allow you to track the IP address to the physical address and see if it matches the address left in the payment form.
An IP address can also belong to a web hosting company or a proxy service, and both are marked red by Shopify. However, an IP address that isn’t coming from the billing address can mean that the user is using a VPN if all other points don’t indicate fraudulent activity.
The highest risk of fraud has IP addresses that are known as a location from which fraudulent activities come. A quick internet search can discover this.
3. Investigate their email address
Email addresses can be investigated by Googling them and researching the information that’s associated with them. If the email address of the order can be found on a list of leaked email accounts, this increases the risk of this order being a fraud. Fraudulent emails
Email addresses can also be used to investigate the online presence of the user. If the email shows up associated with multiple accounts on social media, then this will mean that the order is most likely legit.
The bottom line is to send them an email and see whether they will respond to it. Just like with calling the phone number, once you get the person to answer you, you can easily ask for proof that they are the ones responsible for the offer.
4. Check same address orders
Fraudulent orders are often created by software that doesn’t bother changing certain details of the forms. Even if everything from phone number to credit card is different, if there are multiple orders that are marked as fraudulent that have the same shipping address, there are high chances that this is a fraud.
This indication can be confirmed further by investigating other information left by the customer.
5. Use fraud prevention software (100 words)
Fraud prevention software like Seon will allow you to streamline this process. On top of accepting or declining orders based on the instructions, this type of software can create profiles of your customers and auto-cancel or refund transactions without your action.
At this point, there are over 200 third-party apps in the Shopify app store that will help you to speed up this process and compensate for any shortcomings that Shopify might have in this field.
Many fraud protection apps offer chargeback guarantees, which is a great way to protect yourself. However, expect to invest money in this software, as it comes in a wide price range.
6. Make a decision
You can use general knowledge to protect yourself from cybercrime, but when something as serious as a business is involved, you should always go the extra mile. After you have gone through each point, you wonder what choice to make.
This choice might appear challenging to make, but you should accept only the orders you are 100% sure are legitimate. Even a slight anomaly should be expected.
Without third-party software that guarantees no chargebacks, accepting an offer that will lead to chargeback will completely be your responsibility and your loss. Whether Shopify calculated the risk as low or high, the decision and costs will be on you.
Is it possible to minimize high-risk orders?
Internet is constantly expanding, and each area of internet business is expanding with it. It’s impossible to completely remove internet frauds and scammers, however, we can do a lot to minimize the chances of them doing harm to businesses or individuals.
Through a complicated algorithm, Shopify’s fraud prevention analysis and the system are the first line of defense against scammers, but there are much more steps that you can take to protect yourself. From manually analyzing each high-risk order to implementing fraud prevention software in your online store, you can lower the chances of chargeback and improve your monthly revenue.