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9 Warning Signs of International E-commerce Fraud

Glen Goldstein
Blog Post07/06/2018
Business Fraud and Identity Management

Don’t let the risks of a global economy stop you from taking advantage of the financial opportunities

While accepting payments and listing prices in local currencies goes a long way toward mitigating friendly fraud – where legitimate customers initiate chargebacks over honest mistakes such as not understanding currency conversions – learning to spot the following signs of suspicious, cross-border transactions can also help e-commerce sites mitigate the risk of international business transactions.

While some factors are not unique to international fraud, they occur so often in fraudulent activity from overseas that they are important red flags.

1. Sales coming from countries with the greatest risks

An unfortunate reality of international sales is that fraud poses a larger problem in certain countries. An Internet Retailer magazine report points to Indonesia as having the highest percentage of fraudulent transactions for merchants, with 35% of online transactions turning out to be fraudulent. Venezuela (33%), South Africa (25%), Brazil (11%) and Romania (10%) round out the top five.

Of course, that doesn’t mean companies should let their guard down with other international orders. While South Africa is the only African nation on the top five list, the African continent as a whole experiences a fraud rate 10 times higher than the global average, reports Chargebacks.

2. Suspicious IP addresses

Clever fraudsters can try to hide their country of origin by using a shipping address outside the country. If the geographic location for the IP address doesn’t match the shipping or billing address, it’s worth taking a closer look — especially if the IP address is from a higher-risk country. A cloaked IP address could also be a potential warning sign.

3. Strings of orders from new countries

If you’ve never had a single order from Russia and you suddenly receive 10 in a week, it could be an indicator that something potentially fraudulent is occurring.

4. Special orders

Customized merchandise is especially susceptible to chargeback fraud, as it’s easy to allege the job was botched and demand a refund. It’s wise to limit special orders to trusted customers, especially when international processes can make it harder for merchants to take action against unjustified chargebacks.

5. Orders placed at odd hours

Shopping 24/7 is an Internet perk, but orders placed at unusual times can potentially be indicative of fraud. No matter the time zone, fraudster activity tends to peak during late night and early morning hours — which may very well look like normal business hours if you’re not comparing the time to the country of origin.

6. Unusually large orders

An unusually large number of orders from specific countries or similar regions is a potential red flag. Single orders that exceed an average ticket price are also potentially suspect — especially if they include express shipping and multiple amounts of the same product. Customers who place multiple orders in a short amount of time and ship to different addresses also warrant further examination.

7. Suspicious contact information

Email addresses or phone numbers that look fake also raise suspicion. A jumbled or nonsensical email address like might have been created to be disposable.

Names and addresses written in all lowercase letters or contain spelling errors should also cause concern. Many fraudsters also prefer to send deliveries to freight forwarders, shipping companies, P.O. boxes or even vacant properties to help hide their identities and location.

8. Inconsistent information

Customer information that doesn’t match across multiple purchases should set off alarms. For example, merchants may see the same email address used for multiple orders with different phone numbers or names attached.

9. M-commerce

Mobile applications can also be compromised and give fraudsters access to real customers’ personal information without their authorization. Clever, international fraudsters also may use American shipping and billing addresses to hide the fact that they’re overseas. Geolocation services enable retailers to verify whether a customer’s information matches the IP address of the device used to place an order.

Fear of fraud shouldn’t be a reason to avoid taking advantage of boosted sales. As the world becomes increasingly connected, the global market offers vast opportunities for online merchants to broaden their reach.

Discover how TransUnion can mitigate your risk of fraud while you venture into new territories and embrace new opportunities, contact us today.

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