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How to detect online shopping scams

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How to detect online shopping scams

When buying online, you try to be cautious and avoid suspicious web stores that may turn out to be swindlers. But if you have your own online shop, you face the same problem.

Swindlers make money not only on unsuspecting shoppers by pretending to be web store owners, but on real shop owners as well. As a result, both revenues and reputation suffer from such frauds.

Is my web store safe?

Online shopping scams include a variety of schemes used depending on the situation. If possible or necessary, swindlers may even interact with online shops in the real world, i.e. by tricking the courier. If you own a drop shipping store or don’t have your own delivery service, any frauds of this kind are not your problem. But it’d be a mistake to think that you are absolutely safe as scams know how to make money on purely online shops either.

How do swindlers work?

The most common trick you will face as a web store owner is online credit card fraud. To put it simple, it’s when somebody tries to use a stolen card or its data. It can be a teenager who stole a card from his or her parents or strangers, but often swindlers do it professionally by regularly buying cards and data from illegal sources.

Criminals resort to online shopping scams when they cannot withdraw money from ATM or when they buy goods in order to resell them for higher price. Some of them have their own online shops or they sell products on real markets – often in Third World countries.

Once the real card holder finds out about the fraud, you will have to return the money. And if the goods are already sent out, you will also lose the products. Only affiliate stores are safe since they only serve as an agent between the buyer (the swindler in this case) and the seller. So it’s the seller who will become the victim.

How do you detect a fraud?

Although online shopping scams cannot be recognized in 100% of cases, there are general rules of online fraud detection that could minimize your losses.

  1. Pay attention to untypically large orders. People rarely spend more than $100 on online purchases. If that happens, you’d better check this out.
  2. What is the ratio of goods / shipping value? If your store doesn’t have free shipping, you can also use this parameter to detect a fraud. Swindlers don’t care how much it’ll cost since they spend someone else’s money, but a real buyer won’t pay $40 for the delivery of a $12 product.
  3. Check the card holder’s country and the shipment destination. If they don’t match, it’s probably a fraud.
  4. Continuous attempts to buy a product with different credit cards (more than two) also indicate a possible fraud.
  5. Someone ordering a large number of the same product is suspicious too.

What do I do if I suspect a fraud?

The first thing to come to mind is probably ignoring such customers. However, such policy may also harm your reputation.

  • If you suspect a fraud, first of all, put the shipment on hold. Sometimes it gives enough time for payment processor to confirm the fraud.
  • In the meantime, you should email the customer saying the bank has suspicions and ask to confirm his or her identity. The client can do it by sending you a photo of the credit card (you want to see the name and the last four digits on the card) and an ID (passport or driving license). While the swindlers may possess the actual card, the ID is most likely out of their reach. Despite the inconvenience, most customers will appreciate such caution.

Although following these instructions won’t make your store 100% safe, it’ll protect you from most online shopping scams or at least minimize your losses.

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