Chargeback Prevention

Fraudulent Orders - 7 Signs

Chargeback Fraud Indicators

Table of Contents

  1. How to Detect Fraud - 7 Likely Indicators of a Fraudulent Order
  2. How to Respond to a Possible Fraudulent Order
  3. How Do I Prevent Fraud Transactions?
  4. Conclusion
  5. Frequently Asked Questions

As a business owner, you don’t need anyone to tell you how costly and painstaking fraudulent credit card transactions can be. Fortunately, there are several key indicators for fraudulent orders that can help you avoid things like chargebacks or other losses. 

And with the proliferation of cybercrime on the internet, it’s no longer a matter of “if” you’ll be exposed to fraud, but “when.” While you can’t prevent everything, you can be alert and ready to respond by understanding what the common signs of fraud look like, so you're more aware of how to detect fraud.

Here, we will discuss 7 signs of fraudulent orders that you might come across as a merchant. Fraud orders don't have to be simply a cost of doing business anymore, and you can tailor your operations to recognize and avoid them. 

How to Detect Fraud - 7 Likely Indicators of a Fraudulent Order

New call-to-actionIntuition is your greatest ally in the fight against fraud. If something doesn’t look right, it probably isn’t. Follow your instincts and you’ll sniff out the majority of fraudulent orders before they become time-consuming issues that require intervention from multiple outside sources. It never hurts to look into an order, and you can always back off if you realize that the order is valid.

Cybercriminals are creative and constantly evolving to expose new transactional loopholes and internet technologies, so it’s challenging for the average merchant to stay ahead of them.

However, the large majority of fraudulent orders still result from common, overused strategies. Here are a handful of indicators that can tip you off:

  • Conflicting customer information. One of the first things to look at is the customer information. Does it match up, or are there conflicts? For starters, check the email address. Does it match or resemble the name of the purchaser? This isn’t a foolproof way to spot a fraudulent charge, but it at least gives you something to work with. In most valid transactions, the email will bear some resemblance to that of the purchaser’s name. Keep that in mind and do some further investigation if there isn’t any obvious connection. (On a related note, if you contact the customer via email and they respond, this is usually a good sign. Fraudsters typically use bogus email accounts and/or don’t check them).
  • Large orders from unknown customers. Most businesses know who their big customers are or have contact with a new customer prior to a large order being placed. If your average transaction is $100 and you suddenly see a $5,000 order from an unknown customer, something probably isn’t right. These can be costly ordeals, so act as swiftly as you can.
  • Unfamiliar international shipments. Keep an eye out for unfamiliar international shipments. If you’ve been in business for a while, you’ll know which international countries purchase from you and which don’t. For example, if you’ve never had a single order from a particular country in the past five years but suddenly receive three orders in a week, you should assume something’s wrong. It’s highly unlikely that you’ll unexpectedly have multiple orders from a country you’ve never interacted with in the past.
  • Lots of small transactions with same card. It’s fairly common for a customer to place two transactions closely together. They either want to split up the charge or forget an item on their first order. However, if you begin to see three, four, or five-plus small transactions with the same card over a short period of time, this may be a sign of fraudulent activity. You understand your company’s pattern of sales better than anyone, so use your common sense.
  • Too many declined transactions. A declined transaction here and there is nothing to worry about. However, if you received multiple declined transactions in a short period of time from the same card, something typically isn’t right. It may be best to block this transaction.
  • Many separate transactions from same IP address. Most online payment gateway and merchant account providers capture IP addresses from the purchaser. As the merchant, you should carefully review this information on a regular basis. If you see lots of separate transactions – with different customer information – coming from the same IP address, be wary. Except in unique situations, this is a telltale sign of fraudulent activity. You should investigate the transactions and block these IP addresses from future activity if necessary.
  • Unreasonable expedited shipping. Here’s another instance where logic and intuition come into play. Would a reasonable customer pay $50 to ship $15 worth of goods? Fraudsters may pay for expedited shipping because (a) it isn’t their money, and (b) the sooner they get the goods the more likely it is they’ll get away with the transaction.

There are dozens of other warning signs to watch for, but these are seven of the most common that help with how to detect fraud. Keep an eye out and you’ll save your business a lot of time and money fighting disputes and chargebacks.

How to Respond to a Possible Fraudulent Order

Download the eGuide, 4 Reasons to Hire a Chargeback Management CompanyMany merchants don’t know how to handle possible fraudulent orders and choose not to say anything for fear of offending the customer. While you certainly don’t want to turn a legitimate paying customer away, you also can’t afford to take these situations lightly.

You can check with your card issuer to see what they suggest. Each of the main card providers has clearly published recommendations and you’ll greatly diminish your risk by carefully following their guidelines. American Express asks merchants to call a dedicated hotline and speak with a fraud expert. MasterCard and Visa have virtually the same procedures.

How Do I Prevent Fraud Transactions?

The best remedy for most any type of fraud is prevention. The best method for preventing fraudulent chargebacks is to be proactive in your approach to fraud and payments. Consider the following approaches:

  • Always maintain compliance and security measures. PCI DSS compliance is critical for preventing security issues, and can go a long way towards fraud prevention. Also, if you are a merchant who isn't using EMV chip-enabled cards. 
  • Verify payments. Card Not Present (CNP) transactions in particular are a dangerous place for fraud. That's why CNP merchants use programs like Address Verification Services (AVS) to weed out potential fraudsters by comparing cardholder addresses against provided information. This is also helpful for Card Present Merchants, who also have the benefit of POS technology as well. 
  • Customer service. This includes plenty of items, including transparent pricing and refund policies, clear communication at every part of the customer buying or service journey, and clear and accurate transaction descriptions. 
  • Implement fraud prevention tools. Several vendors offer fraud prevention tools using AI to automate decision-making for transactions. If a purchaser acts strangely or sets off red flags, then the tool can raise warnings or halt the transaction. 


In all situations, the best piece of advice is to remain calm and use your common sense. It’s easy to jump to conclusions, but you need to let your card provider sort through the details. The best thing you can do is prevent the transaction and tell the customer that further authorization is needed for the purchase to be completed. Most customers will be okay with a short delay. Fraudsters will typically flee at the sound of the word “authorization.”


What is considered a fraudulent transaction?

Any transaction that uses payment information stolen from a cardholder or without the cardholder’s consent.


How are fraudulent transactions detected?

A combination of preventative security, intelligence, and hands-on customer service and awareness. Using compliant technology and watching for red flags can help detect fraud, as can AI-driven fraud tools.


Can I get my money back from a fraudulent transaction?

A cardholder can and should get money back from a fraud transaction. The best way to do this is to work directly with the merchant for a refund.

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