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How to Prevent Purchase Fraud

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International eCommerce Fraud And How to Prevent It

International eCommerce is prone to fraud. The reason is that it operates in markets that may have completely different legal codes and rules compared to the country of origin. Therefore, another challenge for international eCommerce businesses is steering clear of fraudulent users, suppliers, shipping carriers, etc.

In the process of scaling internationally, you will come across a lot of fraud unknowingly. So, there is a high likelihood of finding yourself of-guarded. Therefore, it is crucial to set up your international eCommerce system to monitor, validate, and resolve issues related to fraud.

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The Different Types of Purchasing Fraud

One of the most common eCommerce frauds is purchasing fraud. As the name suggests, it refers to fraud that occurs during the payment process. For instance, they might have received a purchased item but claim they have not and ask for a refund.

There are other kinds of fraud, too, such as chargebacks, identity theft, and triangulation. However, they all come under purchasing fraud. We will go through and discuss each of these in this article. We will also talk about ways you can prevent such frauds. So, if you are looking for general guidelines that would help you catch fraud, you are at the right place.

Uncover the People Hiding Behind a Mask

Identification Theft

Identity theft is when someone steals another person's credit card information. They then use it to purchase things online. The seller ships those items. However, the original cardholder later finds out. They get in touch with the credit card provider and ask them to reverse the payment. The payment gets reversed, but the physical goods have already been shipped to the identity thief.

In the scenario of international eCommerce, identity theft directly affects the sellers. They are the ones who have to pay the bill for fraudulent purchases. When the original cardholder claims chargeback refunds, the retailers are unable to recover the shipped goods. So, the identity thief essentially gets the items for free.

The best way to deal with identity fraud is to prevent it before it happens. You can have an account verification and device detection function in place. Your platform should be able to recognize everything from the IP address to the browser, the computer/device information since two different people may use the same machine to access your eCommerce platform.

So, you want to look at a combination of different device detection components. It is one of the most effective ways to prevent identity theft. This kind of multifactor authentication will alert the system if someone tries to purchase with a new device. The device needs to be in the approved devices list to process payment during checkout successfully.

Apart from this, address verification can also help. The system should be able to verify whether the address information given matches the one linked with the credit card. Finally, you can also utilize fraud detection services that can detect fraudulent cards, shipping addresses, etc.

Verifying Damage Claims

Chargeback Fraud

Chargeback fraud refers to when a user uses a valid card for a purchase, but they claim that the shipment did not arrive or was completely damaged.

In some cases, they request a refund before the shipment arrives. However, it may be en route. After they receive the delivery, there is no way the international eCommerce platform or seller could revert it. Therefore, it is essential to confirm that the items have been returned to the seller before issuing a refund. If the user claims that they never received the items, then you need to conduct more advanced checking. Because at this point, it essentially becomes a customer service issue. After all, you would not want to bill the customer if they never received the items.

Ultimately, detecting chargeback fraud can be challenging because you would not know if it is a legitimate issue or fraud. Again, address verification and device detection can help prevent this too.

Keep Everyone in the Loop


Triangulation refers to someone buying an item on behalf of a user, but the user unknowingly supplying extra funds.

So, for instance, a seller offers an item on your international eCommerce site but with a significant markup. It might cost a hundred dollars on your platform, but they are selling it for 200 dollars. When a customer purchases this item from the seller, they buy the item through your website with that customer's credit card. Essentially, the seller pockets the extra $100 without the customer ever knowing that they have been scammed.

To prevent triangulation, you need appropriate legal documentation and approval from all the parties involved. Once again, address verification can also help avoid this. Your system should be able to check if the payment information matches the shipping address. Monitor "nonstandard" orders and determine parameters that might require a manual review of those orders. These parameters may include large orders, unusual orders compared to most orders placed on your platform, etc.

If you are new to international shipping, you may want to review all international orders manually. As your business grows, you may limit manual reviewing to specific orders. These may include orders placed at certain times of the day that appear suspicious, or cases where the device detection did not match, etc. Anything you think is a red flag should trigger a manual review. If the manual review passes, then you may let the order go through.

How can Clarity Help

Clarity International eCommerce Experts

To conclude, international eCommerce is very exposed to all kinds of fraud. So, you want to make sure your international eCommerce application has fraud detection and prevention capabilities. We recommend digging in and looking at some of the nuances of the potential fraud that you'll face in international eCommerce. It can help you make your platform more secure.

If you have any more questions related to this topic, we encourage you to reach out to our experienced team. They can provide a complimentary analysis. Or answer any questions about the next step in the process of expanding your eCommerce platform internationally. We certainly look forward to answering your question and talking with you about your upcoming international eCommerce project.

As you plan how to expand your eCommerce platform internationally, we encourage you to go through the resources below. Some of these can be helpful for your project.

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