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 min read
January 22, 2018

6 Key Signs of Card Fraud


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Card fraud comes in a variety of shapes and sizes, and if you stand down on your guard, fraudsters’ job is simplified. Payment card fraud is infamous for its online presence. As an eCommerce store owner, you can avoid serious headaches by recognizing potentially fraudulent use of cards. While it is not easy to identify that a transaction is fraudulent, the following signs can help you mark potentially fraudulent card transactions before they happen.

  • Multiple Orders: Large orders that contain several quantities of the same products are a good indication of fraud. Anything that is out of the norm is something to watch out for. Receiving many orders or nearly simultaneous orders from the same IP address can also be an indication of fraud. Also, look out for multiple purchases from the same IP address using different payment cards, different customer names, and different billing addresses.

  • Billing address vs. IP: An IP address is not a physical address but it is very effective to locate a device in the internet. If your customer’s IP is from Mumbai but the billing address for the card is in New York, then the chances of the transaction being fraudulent is high.

  • High order velocity: Unusual order velocity is a strong indicator of payment card fraud. Velocity detection is an effective method to battle high order velocity. We can check the historical shopping patterns of an individual and match that record against their current purchases to detect if the number of orders by the cardholder match up or if there appears to be an irregularity. Checking for velocity should be an important basic step for any fraud department. A fraudster will often experiment with one fraudulent transaction to see if a card will work. If it passes through your system without raising any internal flags, a multitude of orders will most likely be purchased until the card is maxed out.

  • Failed card verification: Setting risk filters in a transaction will reduce fraud. Setting a low bar for card verification is a bad setup and will be easily abused by the fraudsters. This can be a serious mistake since card verification failures, such as an incorrect card verification code, may be a good indicator of fraud.

  • Failed address verification: Identifying that the address provided by the customer matches the billing address can provide an extra layer of protection. A mismatch can indicate a fraudulent transaction in which the customer is not the actual cardholder. When a transaction fails to pass the AVS, it may be an indication of payment card fraud. The AVS check is frequently done by the payment processor or gateway. But it is up to the seller to decline the transaction for failed AVS.

  • Bad address: Fraudsters may use fake information to order when processed using stolen payment cards. If the address updated seems incorrect, it is imperative to follow up with the order.

Implementing proactive steps minimize the risk of card misuse. Implementing CVV checks, AVS and Two factor authentication adds extra layers of security on top of the use of a username and password. A mismatch of either of these fraud tools may indicate a fraudulent transaction

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