Comparing each visitor’s behavior and profile with the norm can help tip retailers off to suspicious activity.

Thomas Olk, vice president of risk, Raise

Thomas Olk, vice president of risk, Raise

Global online fraud is growing and creating more risk for the online merchant, while the forms of accepted online payments on e-commerce sites continue to expand (i.e. gift cards, credit cards and payment platforms). All of these different technologies bring online vulnerabilities that merchants need to be able to combat.

Examples of online retail fraud and abuse are still evolving and are often hard to detect and prevent. As e-commerce emerges as the fastest growing retail market in North America and Europe, much is at stake for online retailers, and there’s a pressing need to get smarter about spotting and mitigating fraud.

As a partner to many retailers who deal in traditional and online environments, our team at Raise has put tremendous focus and resources into pinpointing online behaviors that are indicators of potential fraud and abuse in digital spaces. In our efforts, we’ve analyzed the threats of abuse and fraud and curated a list of five tips online retailers should consider as they work to spot and stop fraudulent activity.

How a user behaves can be a stronger indicator of fraud than who they say they are.

1. Monitor shopping behavior


By tracking as much as you can about how someone is engaging your website, you can begin to predict when a transaction may be fraudulent. Is the shopper coming on and looking around, or are they going right to a specific product and spending very little time on the overall site? How a user behaves can be a stronger indicator of fraud than who they say they are. Using behavioral analysis, retailers can tell what is an authentic shopper and what is someone using fraudulent information to make a purchase.

2. Don’t ignore the outliers

It is important to compare each purchase to what a normal purchase of your product looks like. Does this purchase stand out due to its denomination, or is there an irregular cadence of purchases from the same user that seems outside of the normal realm? If a purchase seems to be too good to be true, there is a high probability that it is the handiwork of someone trying to commit fraud.

3. Compare location with IP address


Compare the billing and shipping addresses with attributes you can capture in the background, such as IP address/IP location. Do as much as you can to make sure none of that information is being masked from you, and if the locations don’t reasonably match, a verification protocol should be employed automatically. This protocol could be sending an email to the consumer’s email account or a text to their cell phone number on file with a code they need to plug in to move forward with the transaction. This step allows for fast and painless authentication that ensures the consumer is who they say they are.

4. The devil’s in the details

Look at the different components of the user profile to see if the information is consistent. For example, does the email address make sense with the name, or does the billing address align with the shipping address? Most people pick an email address that is consistent with their name or personality, if an email address is a long alphanumeric combination it is likely a fake. If something seems off when you look at these details, it is worth taking an extra close look.

5. Don’t rest on your laurels


Attentiveness is the key to fraud detection. Continuously updating your processes, and if needed, engaging a third-party vendor to enhance your capabilities and strengthen your weaknesses will help keep your business safe from the expense and headache of fraud.

As the online retail market soars, it’s up to brands and their partners in this space to get in front of potential fraud and abuse. By implementing these best practices, online retailers can confidently combat inevitable fraud and abuse attempts and maintain a trustworthy reputation with their customers.

Raise operates an online marketplace where consumers can buy and sell gift cards.

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