Spotting the signs of fraud: A guide for online businesses

So, just picture this for a moment: you run an online store, and maybe you even have the best team helping you out with this business.

Now, everything seems to be running smoothly.

But then, one day, you get an email from a customer saying they never received their order.

You check the tracking info—delivered. 

Suddenly, you’re left wondering if this is a genuine issue or the start of a fraud attempt.

If you scroll on the small business TikTok page, you’ll actually find that this is far more common than you might even think.

Loads of examples similar to this one seem to be a thing.

But overall, for online businesses, fraud can take many forms.

But regardless of the form itself, it’s really important to know how to handle these situations and protect your business.

But where do you even start?

Well, here’s what you need to know.

Investigate Missing Orders

So, a common type of fraud in online retail usually involves customers claiming they didn’t receive their order.

If this happens, don’t immediately jump to conclusions. Sometimes, it’s not actually a customer but just a random person stating they never received it (in hopes of getting a free product or money).

Again, go on TikTok, and you’ll see that this is super common. So, you’ll need to start by reviewing the order details and checking your shipping records.

If you’ve got proof of delivery, like a tracking number or a signed receipt, that’s a good first step.

But it’s also best to ask for the order number and order information so you can actually make sure this isn’t some sort of lie on their part.

Plus, if you suspect fraud after an investigation, escalate the issue internally.

Most importantly, follow your business’s fraud prevention protocol (or create one now if you haven’t already).

For example, this might involve flagging the customer for future transactions or refusing a refund based on the evidence.

Watch Out for Suspicious Payment Activity

Fraud using stolen credit cards is another common issue for online stores.

Sometimes, it’s not easy to spot a fraudulent order, but there are red flags to watch for (that are usually fairly fool-proof).

For example, large orders from new customers, orders with mismatched billing and shipping addresses, or requests for overnight shipping can signal something’s wrong.

Now some platforms

But generally speaking, always review suspicious orders carefully.

And it’s also going to help a lot to look into this list of credit card decline codes too since these can help you spot if a payment has been flagged for issues like a stolen card or insufficient funds.

But overall, if an order seems off, don’t hesitate to hold the shipment and verify with the customer.

But overall, if this is fraudulent, it’s going to hurt your business, so you’ll need to reach out and request additional details, too, such as ID verification or confirmation of the billing address.

Besides, it gives you peace of mind before fulfilling the order.

Monitor Returns for Fraud

Now, you really have to keep in mind that fraud doesn’t end with purchases.

Actually, some customers might try to exploit return policies by claiming items were never delivered or were defective when they weren’t.

Alternatively, they’ll use the item that they need and then just immediately return it (for example, buy a dress, wear it with the tags, and return it).

So this is something you’ll need to look out for, too.

Ready to take your online business to the next level and craft a winning marketing strategy that includes fraud detection?

I can help! I offer coaching and consulting services specifically designed to help online entrepreneurs grow their businesses.

Contact me today for a free consultation and let’s discuss how we can work together to achieve your goals