Ultimate Ecommerce Fraud Prevention Checklist

What is Ecommerce Fraud?

Ecommerce fraud occurs when a customer places an order with a merchant and claims the order was never received or the item was not what was expected. This scam is widespread during the holiday season when customers are often more likely to try and return items they don’t need or have already received as gifts.

It could also be stolen identities, fake addresses, and a wide array of other issues that those with bad intentions would want to exploit. Again, the point is to get money from your online store when you are not looking.

The Ecommerce Fraud Prevention Checklist

The best way to protect yourself from the loss of revenue and reputation that comes with fraudulent purchases is to prepare for it. This doesn’t mean you have to go so far as hiring a security agency to monitor all your transactions, but it does mean taking some basic steps.

We’ve put this together for you as an easy-to-follow guide on what’s necessary when it comes to protecting your online business against ecommerce fraudsters:

1 – Conduct Regular Online Store Security Audits

Conducting regular online store security audits as part of your routine website maintenance is critical. In addition to your website, you’ll want to ensure that your payment gateway and database all meet the same security criteria.

2 – Stay PCI Compliant

PCI compliance is a set of standards implemented by the Payment Card Industry Security Standards Council. The PCI Data Security Standards (PCI DSS) is an information security standard for organizations that handle credit card data and includes 6 high-level requirements:

• Install and maintain a firewall configuration to protect cardholder data
• Do not use vendor-supplied defaults for system passwords and other security parameters
• Protect stored cardholder data
• Encrypt transmission of cardholder data across open, public networks
• Use and regularly update anti-virus software or programs
• Develop and maintain secure systems and applications

3 – Put Measures in Place for Active Fraud Monitoring

There are many providers of fraud prevention services. For the most part, these services will be similar in the features they offer. However, choosing one that has been around for a few years and has a good reputation is essential. These services use complex algorithms to detect suspicious activity on your site and notify you when something looks amiss.

4 – Always Use an Address Verification Service (AVS)

Address Verification Service, or AVS, is a fraud prevention tool that helps verify a customer’s address. When you use AVS with your checkout process, it checks the billing address entered by the customer against the address on file with the credit card issuer or bank.

If they don’t match up and your business can’t verify that it’s legit by matching them up manually as well, then there’s a good chance that something suspicious is going on.

5 – Require CVV Numbers

The “CVV” is the three or four-digit security code on the back of a credit card. It should be used whenever possible, as it helps verify that the individual using their credit card is actually the owner of that specific card and not someone else who just swiped it for personal gain. 

Not only does this prevent fraudsters from using stolen cards, but it also reduces chargebacks due to misused credit cards by ensuring that customers know where their money is going before they complete a transaction.

6 – Set Purchase Limits to Avoid Fraudsters

There are many ways in which you can set purchase limits:

• Minimum order amount — An automated rule that sets the minimum amount a user has to spend before they’re allowed to complete their transaction.
• Number of transactions per user — An automated rule that blocks users who have made too many purchases in a given timeframe (usually within 24 hours).
• Number of items per order — An automated rule that prevents people from making multiple small orders just so they can get around your other rules (like the number of transactions).
• Total amount spent per day or week.

7 – Create Blocklists for Regions or Users

Blocklists are a list of IP addresses, email addresses, or other identifiers you want to block from your store. They are beneficial for stopping transactions from specific countries or regions. You can also use blocklists to block particular customers who have previously caused problems.

8 – Require Strong Passwords

Every password, from your admin access to the average user, should require at least 10 characters and have special symbols and numbers. You can even suggest customers work with a password generator to keep their accounts more secure.

9 – Only Work with Reputable Merchant Providers

You may be tempted to go with the cheapest merchant provider, but don’t! Only work with reputable merchant providers who have been in business for a long time and have a good reputation. Look for 24/7 support and fraud protection services as well.

10 – Use Preventative Fraud Plugins

Many different types of fraud prevention plugins can help you identify fraudulent transactions. These plugins will block suspicious activity, monitor fraud, and allow you to set up rules to automatically block suspicious activity.

Fraud prevention is an ongoing process that requires constant attention and updates based on changes in the market. At OPMC, we focus on our Anti-Fraud plugin for WooCommerce, which assigns values to each transaction based on a security process that learns over time. That way, you always know if your transactions are good or potential fraud.

11 – Keep Everything Up to Date

You’re going to need to keep things up to date for several reasons. Your website is the most critical piece of your ecommerce fraud prevention plan, so you want it to be as secure as possible. That means keeping all the software that powers it up to date with the latest patches and fixes.

The same goes for any plugins or extensions you use on WordPress or third-party applications such as WooCommerce or Easy Digital Downloads.

12 – Prepare for High Volume Holidays

Preparing for high-volume holidays can be daunting, and that’s why ensuring you have the right tools in place is essential. You want to do a full security audit before your sales skyrocket due to Christmas, New Years, or other holidays.