Effective fraud prevention starts with a thorough merchant onboarding process, followed by continuous monitoring of transactions. The risk team looks for several key indicators to assess potential fraud risks for example:
1. Unusual Business Patterns or Industry Risks
Certain industries, like electronics, travel, or digital goods, are more commonly targeted by fraudsters. The risk team scrutinises businesses in these sectors more closely, especially if the business model seems unusually risky or high-volume for a small merchant.
2. Mismatched or Inconsistent Information
The team examines the details provided during onboarding, including:
Business registration information that doesn’t align with public records.
Multiple address changes or information that seems incomplete or inconsistent.
3. Unusual or Suspicious Domain Names
The risk team also checks the merchant's website for suspicious signs, such as:
Unprofessional or mismatched domain names.
Insecure payment pages.
A lack of clear contact information or an unclear refund policy.
Once a merchant is onboarded, it’s important to continue monitoring their transactions for any potential fraud risks. Here are the key signs the risk team looks for when supporting merchants:
1. Unusual Purchase Patterns
The risk team keeps a close eye on:
A sudden spike in transaction volume, especially if it’s out of line with the merchant’s typical sales patterns.
Multiple orders from the same IP address or email address in a short period.
Large transactions from new customers or accounts that have little transaction history.
2. Mismatched Billing and Shipping Information
Fraudsters often use stolen card details and ship items to different locations to avoid detection. The team flags any transactions where:
Billing and shipping addresses don’t match, especially when there’s a geographical mismatch.
The shipping address is in a high-risk or international location where the merchant doesn’t usually do business.
3. Suspicious High-Risk IP Addresses
Even after onboarding, the team continues to monitor for transactions coming from high-risk IP addresses. Multiple transactions originating from these addresses within a short time frame are flagged for further review, as they may indicate bot-driven or fraudulent activity.
4. Increase in Chargebacks or Refund Requests
An increase in chargebacks or refund requests can indicate fraudulent behaviour.
What Happens Next?
If the risk team detects any of these fraud indicators, the following actions may take place:
Merchant account review or suspension: We may temporarily suspend the account to investigate further.
Transaction monitoring and blocking: Any suspicious transactions are flagged, and fraud detection tools like Bin Blocking or IP Blocking may be implemented with merchant approval as there might be added costs.
Stay informed, stay vigilant, and let’s continue working together to keep fraud at bay!