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How to Combat Ecommerce Fraud

By implementing the right tools and best practices, you can reduce the likelihood of fraudulent transactions and chargebacks. Many payment gateways, such as PayPal powered by Braintree, come with basic fraud tools such as AVS (Address Verification System) and CVV (Card Verification Value).

A select few, including PayPal powered by Braintree, also support 3D secure, which adds another layer of verification. All of these tools help detect and prevent fraud at checkout.


Be careful! A payment gateway's basic fraud tools may not be enabled in your merchant account by default. To enable them, you’ll need to set up AVS, CVV, and/or risk threshold rules individually.

Many online retailers rely only on these basic fraud tools to evaluate the legitimacy of purchase attempts. It is important that merchants realize that payment fraud is constantly evolving, and relying on just one or two tools is not a dependable way to identify and stop unauthorized card use.

In the case of clean fraud, some transactions can still get through despite your best efforts to prevent it. Whether you have your own staff or a dedicated service, this is where fraud detection and prevention solutions come into play.


Fraud Detection Solutions

A fraud detection and prevention solution is a company dedicated to identifying risky transactions and protecting online merchants against chargebacks and lost revenue. They go beyond the basic tools of address and security code verification. They analyze an extensive amount of information from many sources to make an order approval recommendation.

Some fraud solutions like, Signifyd, incorporate methods such as machine learning, risk scoring and device fingerprinting, just to name a few. Device fingerprinting analyzes multiple properties such as browser, operating system, language, location and whether that device is related to fraud across that solution's network of merchants.

Additionally, some solutions provide a managed service and shift fraud liability away from merchants. For example, if an order approved by Signifyd comes back as a chargeback, they will pay the claim, including shipping and all associated fees, within 48 hours.


Managing Your Risk

By putting the right tools and processes in place, you can reduce your chances of losing revenue and drowning in chargeback fees. Below are a few recommendations and best practices:

  • Monitor transactions for the flags listed in Chapter 2.
  • Use the Address Verification System (AVS).
  • Require the Card Verification Value (CVV).
  • Provide contact information on your storefront, a clear return policy, and good customer service to avoid order disputes.
  • Give shoppers realistic delivery dates and use online tracking to minimize "Item not Received" chargeback claims.
  • Ensure your products have clear photos and detailed descriptions to minimize "Not as Described" claims.
  • Clearly disclose any functional defects or cosmetic damage.
  • Consider investing in a fraud prevention & protection service like Signifyd.

To help merchants protect themselves and their customers from online fraud, BigCommerce takes care of the vast majority of the steps toward PCI Compliance. Additionally, many of our payment gateway integrations include their own fraud tools such as 3D secure and Cybersource Decision Manager. We've also integrated with various solutions you can find in our App Marketplace, like:

Investing in the tools to detect and reduce fraud while incorporating best practices will allow you to spend more time on your business and less time dealing with fraud.

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