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Preventing Fraudulent Shopping Cart Transactions

This morning, my email inbox contained an urgent warning from Northwest Wenatchee Bank informing that my checking account had been compromised! Thieves could be stealing my funds and identity right this very instant! To protect myself and my loving family, I needed to log in to a "secret website" they listed and reset my password. Only then would everything in my world again be safe, secure, and full of kitten kisses.

Just one problem... I don't have an account with Northwest Wenatchee Bank.

We're all familiar with "phishing" scams like this. Some hooligan out there is trying to get Northwest Wenatchee Bank customers to send him their account password. As I was deleting the email from my inbox, I started thinking about online fraud, and thought an article detailing Modular Merchant's anti-fraud tools would be a good idea.

Modular Merchant's Fraud Detection & Prevention Tools
Modular Merchant includes a set of security tools designed to detect and prevent fraudulent transactions. These tools are specifically designed to deal with fraud issues common for merchants selling online. If you have a shopping cart, there's certain tactics thieves take against you.

These fraud filters provide a means to create a set of editable rules that will prevent suspicious orders from being placed in your online store in the first place. Using these filters will give you and edge in identifying potentially fraudulent transactions and taking action against them.

Maximum & Minimum Order Value Filters
Location: [Navigation Menu > Admin > System Settings > Security Settings]
The order value filters allow you to set a range for the greatest and least value for orders accepted by your store. Orders outside this range will be declined.

Order Floodcheck
Location: [Navigation Menu > Admin > System Settings > Security Settings]
The floodchecks sets the amount of time that must pass before a customer may place another order. This setting prevents your store from being barraged by "spam orders" from fraudbots. It also prevents legitimate customers from accidentally resubmitting their orders, in case they accidentally click the "submit" button a zillion times.

Decline order if Billing & Shipping countries don't match
Location: [Navigation Menu > Admin > System Settings > Security Settings]
As it states, this option will tell your store to decline any order in which the customer's shipping country is not the same as their billing country. Is the customer's order being billed to someone in Georgia state, but being shipped to an address in the country of Georgia? Whoopsie-daisy! That order would be declined.

Ban Tools
The Ban Tool in your store's administration area allows you to create a series of rules to ban orders matching any of a set of criteria. Orders containing a banned value will no longer be accepted. When a banned order is attempted, the store can send a notification to a list of email addresses you specify. Notes can be added to each banned value, serving as a reminder as to why the value was banned in the first place. Also, ban rules can be temporarily "unbanned", allowing you to give someone a second chance without completely deleting the ban rule and losing any notes you've written about it. The following values can be banned:

Ban an Email Address
Location: [Navigation Menu > Customers > Ban Tool]
Ban any problematic email addresses you encounter. Since its so easy to create multiple email addresses, banning by email address alone may not stop a fraudster, but it will slow them down.

Ban a Credit Card Number
Location: [Navigation Menu > Customers > Ban Tool]
If you suspect a provided credit card has been stolen, the specific card number can be banned, and no further orders using that credit card will be accepted by the store.

Ban a Country
Location: [Navigation Menu > Customers > Ban Tool]
Waves of fraud from a specific country can sometimes happen as thieves set up organized operations in a geographic location. If you're experiencing attempted fraud from a specific country, enter the country name and put a stop to it all at once. After the thieves have moved on to a new target, unban the country with the click of a button and resume your normal operations.

Ban an IP address
Location: [Navigation Menu > Customers > Ban Tool]
In between banning an email address and an entire country is the option to ban an IP address. This will help shut down a fraudster that keeps returning to your store under the guise of multiple fictitious customers.

The anonymity the internet provides can encourage shopping cart fraud. Preventing fraudulent transactions is an ongoing challenge for all online merchants. Regardless of your store's size, transaction volume or web design expertise, you could be targeted by online thieves.

That's why it's important to proactively establish rules in your shopping cart to prevent fraudulent orders from being accepted in the first place. Preventing a fraudulent transaction from being accepted is much easier to deal with than cleaning up the mess caused when one gets through. If you can stop the thieves at the gate, your online store will be safer, more secure, and ready to be filled with kitten kisses.


— Last Edited - 05/25/2010 7:30pm PDT
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