Clean, Simple but Powerful

How to ensure Shopify fraud protection


  • By Editor Team
  • 14 Nov, 2021
  • Guide
  • 12 Min Read
Last Update: 11 Sep, 2022

Fraudulent eCommerce scammers put store owners in great trouble. Some online ventures see up to 5% of their yearly revenue go down the drain. An eye-rolling stat anticipates $443 billion in false declines only in 2021 (Statista).

Per the Federal Trade Commission, customers were handed a $3.3 million loss in 2021 while online stores were ripped off a hefty $246 million at the same time.

What is eCommerce fraud?

eCommerce swindling takes place as a trickster pulls off a website security gap and steals valuables. These fraudsters technically grab the credit card information of the customers. Then they wipe clean those accounts.

Their notoriety is not restricted within the customer’s wallet but the business itself. Con artists dupe you into selling products using someone else’s credit card data. Thus fraudulent transactions take place. The real card owner then claims an order cancellation. Things are getting interesting, isn’t it?

 —The order termination triggers the money-back policy from your store. Thus the original cardholder retrieves his monetary losses. However, your store actually loses products in the middle of this conundrum. If authorities can apprehend the perpetrator, you have a hope of settling the loss. But such a perfect finish takes place once in a blue moon.

So, all eCommerce stores beef up their security protocol in order to prevent sham orders and deceitful payments. This is a huge preference for both large and small Shopify businesses. Let’s dig into how Shopify tracks this sensitive issue and comes to your rescue.

How does Shopify Fraud Protection function?

shopify fraud protection function

Shopify saves your hard-earned money by unleashing its ‘Fraud Protect for Shopify Payments’ scheme. This special service jumps into action to counter fraudulent chargebacks. Activation of this policy initiates a particular order processing method. 

It categorizes Shopify Payments in two classes, ‘protected’ or ‘not protected’. Protected orders result in a Shopify fee. Shopify guarantees the payment anyway. Say, the Shopify classification goes wrong and double-dealing occurs. Shopify holds itself responsible and reimburses you the tricked amount while managing the issue.

Several businesses in the USA enjoy Fraud Protect for Shopify Payments by enabling the ‘Fraud Protect’ section. The rest of the world is yet to catch up. So, an eCommerce store in Brazil or Canada has no such safety net and this writeup is not meant for them.

How does Shopify Fraud analyze an order?

Shopify has implemented fraud analysis. It helps detect fraudulent orders. It reviews risky orders in order to dodge future chargebacks. Ducking the major-risk orders is beneficial as it comes with fewer chargebacks. Fulfilling high-risk orders could get your store disabled and removed from Shopify Payments.

Credit card companies reverse funds against stolen cards even if the orders are fulfilled. Shopify expedites your evidence gathering in claiming disputed charges. Fund reversal decision squarely lies on the credit card issuing financial organization, such as the bank. Here, Shopify has no role and it does not cover charge reversals from banks.

 — Fraud analysis functions in tandem with online credit card orders if Shopify can verify the payment. Therefore, some regular and offline orders get no recommendations.

A Basic Shopify plan without Shopify Payments entails Fraud analysis as such:

  • Indicators
  • Support for third-party fraud apps

Shopify plans with Shopify Payments offer fraud analysis as such:

  • Indicators
  • Support for third-party fraud apps
  • Fraud recommendations

What are the Shopify Fraud analysis indicators?

Shopify Fraud analysis processes several indicators. These parameters cross-check each other and thereby, investigate an order that raised your suspicion. These indicators systematically handle multiple information as followed:

  • If the credit passes the AVS checks
  • If the customer’s CVV code is correct
  • The IP address data that helped place the order
  • If the customer tried diverse credit cards to place the order

A complete order analysis contains all these yardsticks. These markers are classified in green, red, and grey icons for you to identify behavioral patterns of the order. So, you can flag it pretty easily.

1. Indicator

  • Characteristics of this order are similar to non-fraudulent orders observed in the past.
  • Card Verification Value (CVV) is correct.
  • Billing street address matches credit card’s registered address.
  • Billing address ZIP or postal code matches the credit card’s registered address.
  • There was 1 payment attempt.
  • The payment was made with 1 credit card.
  • Billing country matches the country from which the order was placed.
  • The IP address used to place the order isn’t a high-risk internet connection (web proxy).
  • The location of the IP address used to place the order is in Kalamazoo, Michigan, USA.
  • The shipping address is 50 km from the IP address.

Green indicators illustrate order characteristics typical of legitimate orders. Red indicators flag order characteristics suggestive of fraudulent orders. Grey indicators arm you with additional useful information.

These indicators hint you on how to scrutinize a Shopify order. However, the chart does not elaborate on the possibility or percentage of fraudulent activity. So, you need to check out the order’s Fraud Recommendation in order to assess the probability of a deceitful order.

2.View the Fraud Recommendation

Shopify Payments users can look into fraud recommendations. It categorizes the chargeback risks associated with the order as low, medium, or high. The recommendation also marks medium and high-risk orders to give merchants ample insights.  —So, they can make the right decision every time.

The ever-updating algorithms of Shopify are 24/7 buried in this analysis. The review method bases its recommendations on the historical database of transactions. It actually detects deceptive trends and patterns.

3. Analyze third-party app recommendations

Merchants can tap into third-party fraud solutions as well. These apps provide transaction indicators and recommendations in their Fraud Analysis section.

 — As the order moves through these three phases, it gets classified as either  “protected” or “not protected”. If the merchant claims a chargeback on a protected order, Shopify Payments reimburses him. Then Shopify settles the whole chargeback dispute with the credit card issuer.

1 FraudBlock Fraud Prevention

fraudblock-apps

If flagged as “high risk” by Shopify, FraudBlock cancels, restocks, and refunds fraudulent orders. This automatic process saves you time by instantly detecting fraudulent orders. This app protects merchants from chargebacks with its immediate cancellation of deceitful ones. 

FraudBlock is a fascinating anti-fraud apparatus with stunning features:

  • Spontaneously cancels, refunds, and restocks “high risk” orders.
  • Single-click installation.
  • Capable of whitelisting previous customers and viewing canceled orders.
  • Fixed monthly fees and no percentage pricing.

2 Fraud Scanner

fraud-scanner-1024x357

Fraud Scanner also automatically cancels Shopify’s “high risk” orders. Hence, merchants need not personally figure out identity theft issues. This app saves your time and eliminates chargebacks. Additionally, it outright blocks fraudulent spam orders from swindlers.

Prominent features:

  • Bot-driven cancellation of high-risk orders.
  • Total control over the orders.
  • 10-second setup.
  • activate/deactivate settings.

3 Signifyd – Fraud Protection

signifyd

Signifyd multiplies your change rates by removing garbage in purchasing pipeline. The Fraud protection app decisively simplifies the process to enhance customer satisfaction. Signifyd orders are totally guaranteed. It allows the clean request to fast-pace through the store. Therefore, you can rapidly recover the lost pretty pennies from chargebacks.

Features: 

  • Maximize Conversion
  • Automate Customer Experience
  • Eliminate Fraud and Abuse

4 NoFraud Fraud Prevention

no fraud apps

NoFraud exploits a cutting-edge algorithm to slash chargebacks, requiring none of your involvement. It resorts to a reservoir updating data for effective analysis of fraudulent activities. So, the app can make momentary approvals or declines. Scams go down to as little as 0.01% of your online orders.

NoFraud comes with a real-time cardholder verification process against individual transactions. A pool of in-house specialists manages this solution without any merchant input whatsoever. It runs compatible with Gift Wizard, Once Click Upsell, Carthook, Recharge, and Payments.

Features: 

  • Chargeback protection.
  • Responsive order screening.
  • Customer-managed whitelist & blacklist.
  • Personalized review method.
  • Phone & email support.
  • Invalidates a flagged order before any third party processes it.
  • Extensive fraud attempts reports, reviews, statuses, etc.

5 Fraud Filter

Fraud Filter

Strikingly, the Fraud Filter app allows custom filters, barring suspicious customers from order placement. Besides, it taps into rule-oriented functionalities. So, you can install warnings for deceptive orders and block them for good. This system effectively parrots Shopify’s fraud protection instruments. Therefore, you may opt-out of this privilege. Nonetheless, the ratings and comments expose some shortcomings of this Shopify fraud prevention app. The simple interface easily installs and integrates with your store’s admin panel.

Features:

  • Exceeds order protection expectations, provided in the built-in fraud analysis.
  • It evaluates risky orders before fulfillment and fund handling.
  • Allows limiting the checkout to a handful of selected customers.
  • Blocks customers from flagged websites.
  • Withdraws certain credit cards from checking out.
  • Informs merchants of iffy orders or downright cancels them.

6 FraudLabs Pro

fraudlabs

FraudLabs Pro scrutinizes orders in the current time and reports outcomes. It cashes in on blacklist rules and machine learning algorithms for order review. The risk score potentially derives from transactions, IP address, email address, physical address, credit cards, and device fingerprints.

You can automate a fraud prevention vehicle by enabling those 48 preset rules to activate an alarm via phone or email notifications. In violation of the rules, you receive a notification for better handling of the issue.

FraudLabs permits you to probe into all orders and get a notification on any instrument of your preference. An open API functions for all external-API-call compatible shopping carts. It introduces handy add-ons for more than 15 shopping carts.

Features:

  • Fraud review & scoring.
  • Email address identification & validation.
  • IP address geolocation & Proxy validation 
  • Validation of Device transaction.
  • Transaction velocity validation.
  • Blacklist validation.
  • Export controlled country validation.
  • Malware-exploit validation.
  • Custom rules trigger.
  • FraudLabs Pro Merchant Network.
  • FraudLabs Pro Merchant Administrative Interface.
  • Mobile app notification of fraud orders.
  • Social profile query.
  • Email notification of fraud orders.

7 Sift

Sift

Sift mechanically reviews the order information including mail address, IP address, and phone numbers. Then it generates a fraud score. Merchants can access this scoresheet to determine their approval or decline of order.

Sift appeals to domain experience, big data, and machine learning to qualify accurate financial guarantees for fraudulent chargebacks. The app itself can automatically examine the order and present you with an approve/decline decision.

Features:

  • Big data, machine learning.
  • Automatically redirects orders to Sift for chargeback protection.
  • All approved orders enjoy a 100% financial guarantee.
  • Automatic order review. 
  • Zero fraud liability.
  • Automated back office.

We are trying to cover a process of Shopify fraud protection. what is your queries? Put your thought on it.

Editor Team


We are a group of WordPress experts (editorial team) from Themeim. All of these articles go through manual testing to reveal the ultimate outcome.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.