Having been in the global merchant account processing space since 2001, we’re all too familiar with how widespread and common e-commerce fraud is. Just when we think it can’t be more rampant than it is, we see increasing numbers to merchants’ collective disadvantage. We’ve read and blogged extensively on the many effective steps merchants can take to spot fraudulent orders as well as the clues that fraudsters leave, such as shipping and billing mismatches, opting for no signature upon receipt, or many different cards used to purchase one product in a short window.
One red flag is the shipping of goods to suspicious locales. Over the last few years we’ve heard of clever and bizarre shipping locations to which ‘consumers’ have their good shipped, such as a state park, a rural county road intersection, or more commonly storage facilities, hotels, a UPS or FedEx store or a vacant home, all of which should trigger warnings and further examination of the transaction.
Performing a search on the shipping address is fast, simple way to flag a suspicious purchase.
A simple search of the address
We’ve got a global merchant account processing colleague, a solo entrepreneur, who has been in business nearly 20 years and is possibly the most fraud-savvy merchant we know. Because of his experience, he is able to spot even the smallest of clues fraudsters unknowingly leave. If a seemingly odd order comes in, he’ll do a simple search of the shipping address.
Most often, the shipping address matches the credit card billing address — always a good sign. When there is a mismatch, many times the customer is sending his product as a gift to a loved one across the country (a call to the shipper of the product is always a good idea).
Homes for sale
Other times, however, a search of the shipping address might reveal a strange location — like a home for sale. It is certainly not out of the realm of possibility that the ‘customer’ owns said house on the market, but we’ll go as far to say that the chances of fraudulent activity supersede such a coincidence. Vacant homes, particularly those in seller’s markets, are commonly used as drop-off/pick-up points for e-commerce fraudsters. Typically, the dubious process works as such:
- The criminal completes the online order and selects overnight shipping with no signature upon receipt (a red flag in itself).
- Criminal tracks the shipping and gauges when the item will arrive at the vacant home.
- Criminal makes the pickup. Mission accomplished, crime committed.
Homes for sale aren’t the only hot spots where online shoplifters claim their wares.
Virtually anyone can enter a hotel lobby and blend in with other guests. There are people in meetings, a wi-fi signal, cafes, and people coming and going. It is in these settings that fraudsters set up shop and wait for the shipping van pull in, where they meet them at the door and pick up their wares, virtually unnoticed.
One of the clues to e-commerce fraud is delivery to a storage facility. Such schemes are mindful of online thieves who receive large items or items in bulk — who need space to store such items. Thus, they schedule deliveries at a storage locker, and make arrangements for the front desk workers to sign for them, further distancing themselves from the crime.
A solution for such situations is to impose a signature upon delivery by the recipient.
A proactive measure in fraud mitigation is partnering with a reputable shipping company, such as FedEx, DHL or UPS, that requires valid identification whenever a consumer retrieves shipped goods. We’ve read of fraudsters asking the store clerk to sign for the goods, where the fraudster later claims them.
AVS checks useful in global merchant account processing
About a year ago we blogged about the growing popularity of using address verification systems (AVS) checks to validate purchases that seem to be suspicious. We noted a survey which found that 86 percent of the e-commerce merchants polled use AVS checks to authenticate purchases, which was very encouraging.
Global merchant account processing with Instabill
Instabill is a global merchant account processing firm partnered with acquiring banks — internationally and domestically — that welcome high risk industries such as CBD, online pharmaceuticals, nutraceuticals and online gaming. Our merchant account experts are on hand at 800-530-2444 Monday through Friday (8 a.m.-6 p.m. eastern time).