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BizReport : Ecommerce archives : August 26, 2015

Top 3 tips to set up rules to protect against fraud

Fraudsters often target products that will be easiest to resell. For businesses selling bicycling gear, for instance, criminals might have an easier time selling bike lights and locks than a whole stolen bicycle. Repeat offenders also know that high dollar purchases trigger fraud prevention systems, so they will focus on low dollar orders and maybe spread them across multiple credit cards. Here are our top 3 tips to set up rules that will help identify fraud faster.

by Kristina Knight

First, create a blacklist.

"Record a blacklist of fraudulent credit cards, email addresses and shipping address so you automatically decline them in the future. Be sure to review questionable transactions closely so you don't accidentally put a good customer on your blacklist," said Ralph Dangelmaier, CEO, BlueSnap.

Second, track the performance of fraud rules

"Whether you use a fraud tool or monitor transactions manually, create rules for preventing fraud. Good rules flag or stop suspicious orders without stopping legitimate purchases. So for example, if 95 percent of your orders contain less than 20 units, requiring a manual review of all orders over 20 units is a reasonable rule. To see if the rule is working, you can compare the percentages of fraudulent transactions and non-fraudulent transactions that triggered the rule," said Dangelmaier.

Third, update your rules

"Review declined transactions frequently so you understand what forms of fraud are most prevalent and adapt your rules. For example, if you have multiple fraudulent orders with emails (yes, people still have them!) shipping to Houston, Texas, create a rule or monitor all transactions with email domains shipping to Texas. Over time, smart fraudsters will identify your rules and find ways to get around them, so keep evolving," said Dangelmaier.

Tags: BlueSnap, ecommerce, ecommerce fraud, ecommerce tips

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