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There are a number of characteristics that can point to a fraud in an eCommerce transaction. Listed below are 12 such signs, the presence of which should alert merchants operating in a card-not-present environment of the possibility that a fraudulent transaction may be under way. If only one of these signs is present, this may not be a cause for concern but if several are identified in a single transaction, the merchant should investigate and establish the legitimacy of the card and the customer before processing the payment.
First-Time Shoppers. Criminals are always looking for new victims. Once they commit a fraud at one merchant, they usually move on to another and never come back.
Larger-than-Average Orders. Stolen payment cards have a very limited life span so criminals need to make a quick use of them. Large-size orders are one way of doing that.
Orders for Several Items of the Same Kind. Just as with larger-than-average orders, purchasing multiple items of the same kind is a way of maxing out stolen cards as quickly as possible.
Big-Ticket Items. Big-ticket items have high resale value, maximizing the fraudsters’ profits.
Orders with Overnight Delivery. Naturally, criminals do not much care about shipping costs and are more likely than legitimate shoppers to order items with an overnight or another type of a rushed delivery.
Orders from Internet Addresses at Free Email Services. Free email services have no billing relationship with their users, leaving no possibility for verification that a legitimate cardholder has opened the account.
International Shipping Addresses. A substantial number of fraudulent transactions are shipped to international addresses. The Address Verification Service can only work for U.K. addresses outside the U.S.
Similar Account Numbers. There are various software tools for generating card account numbers, such as CreditMaster. These numbers are often very similar.
Multiple Orders Shipped to the Same Address. Such orders may indicate the use of a stolen batch of cards or of fraudulently generated account numbers.
Multiple Transactions on One Card in a Short amount of Time. Such transactions may indicate that a criminal is attempting to run up a stolen card’s credit line as quickly as possible, before the account is closed.
Multiple Shipping Addresses. Similarly to the previous scheme, a card may be used multiple times in a short amount of time with the orders going to several shipping addresses.
Multiple Cards from a Single IP Address. Such transactions may indicate multiple orders placed from the same computer, even if different names and shipping addresses have been used.