Fraudulent activity can be one of the most costly occurrences for your business. These days, we see many instances of bad actors stealing customer information, from usernames and passwords to credit card details, and using them for malicious purposes. We recently covered some different types of fraud your business should be aware of – how do you know if you’re dealing with fraudulent activity?
Red Flags and Suspicious Patterns to Watch For
Unusual new customer activity
A significant amount of accounts being opened with existing customer names but different email addresses, customers attempting to open multiple new accounts, or customers opening accounts using email addresses that have been not used in several years.
Order size
Customers are placing higher- or lower-than-average orders – for example, if a typical transaction is $1,000 USD and you notice a transaction of $3,000, that could be a sign the transaction is fraudulent.
Additionally, this could be narrowed down to specific products – for example, if a low-selling item is being purchased in a higher-than-usual quantity.
Be aware also that many attackers will engage in card-testing to see if a credit card number they’ve obtained is still working and not reported as stolen. Seeing multiple small transactions could be a sign that a card may have been stolen.
Payment velocity
Seeing a larger number of transactions than usual within a specific timeframe could also indicate a card has been stolen.
Shipping activity
Many businesses still have an element of human review involved from the time the order is placed, to its fulfilment. Sometimes attackers will select the fastest shipping possible in the hopes that the extra money going to the business will encourage them to bypass the review process.
If you notice several orders being placed that are all going to the same shipping address but are being placed with different customer accounts or using multiple cards, that could also be a sign of fraudulent activity.
Geography
If you primarily operate only in the U.S. and begin to see orders placed from other countries, or customers attempting to enter shipping addresses outside the U.S., that could be a red flag.
While a mismatch of billing and shipping addresses won’t always indicate fraud, keep an eye out for how big the discrepancy is and how often it is occurring.
Also watch for customers adding multiple shipping addresses.
Endpoints and IP addresses
If you can see that the IP address being used to place the order does not match the shipping or billing address, that could signal a fraudulent transaction.
Promotion or coupon fraud
Customers attempting to use the same promotional codes repeatedly.
While technology is becoming more advanced every day and attackers are finding new, more sophisticated methods of obtaining information, much of this data is still being stolen through popular methods like phishing, social engineering or scams. All it takes is one data breach, or one negative customer service interaction, for your business to suffer reputational damage as well as financial. The more you know about what red flags to watch for, the better prepared you will be to fight it.
