As a retailer, eCommerce is something you can’t escape, nor should you want to. While 94% of retail sales still take place in a brick and mortar store, eCommerce is gaining fast, and expected to increase by 17% annually. With $294 billion in sales, eCommerce is a sales channel that it’s would be foolish to ignore.

But eCommerce comes with risks. Specifically, since most transactions are completed with a credit card, fraud is a danger online merchants must be ready for. In 2016, eCommerce retailers lost nearly $7 billion to fraud.

As the old saying goes, an ounce of prevention is worth a pound of cure. It’s critical that retailers with online storefronts know the warning signs of card fraud with an eCommerce transaction.

Individually, these warning signs may be innocuous. A declined transaction is not an immediate sign of fraud, for instance, and treating it as such puts you in danger of driving away valid – and paying – customers. But these red flags do still represent warning signs that may warrant further analysis of the transaction to prevent what could end up being significant losses.

6 Red Flags of Online Credit Card Fraud


First-time shoppers

New customers are the golden ring for all retailers. But when it comes to credit card fraud, they can also be the harbinger of bad news.

Criminals are constantly looking for new sites to buy from, hoping that the merchant won’t notice their unusual purchasing behavior. Also, if they have never purchased from you before, there is no way for you to have a record of them from previous bad transactions.

Address inconsistencies

There are a lot of combinations of bad addresses that can signal caution is needed.

International shipping in general, but particularly if the billing address of the credit card is in the U.S., should warrant an additional look at the transaction.

Phone number area codes and zip codes should match the billing address.

If you notice multiple cards being used to purchase items sent to the same address, take the time to check into the transaction further.

The reverse is true as well. If you have multiple purchases with the same billing address, but multiple shipping addresses, that could signal organized criminal activity that is coming from a single place.

Rush or Overnight shipping

A criminal never knows when the clock will expire on a stolen credit card number.  The account could be locked down at any time once the account holder or issuing bank notices fraudulent behavior.

Because of this, these fraudsters will pay for expedited shipping, in the hopes of getting their items before the card they are using is no longer any good.

Orders containing multiples of expensive items

For the same reason that criminals have items shipped overnight, they may also purchase multiples of expensive items in a single transaction.

If you note unusual purchasing patterns, like someone ordering multiples of the same expensive necklace, several pairs of costly gym shoes, or more than one TV, these transactions should cause concern.

Fake or suspicious contact information

Part of the contact information for an online transaction includes email and phone numbers. Both of these should make sense and be a real means of contact.

For instance, email addresses that appear to be random numbers and letters should be concerning, or ones that appear to be nonsensical sequential numbers and letters, like [email protected], should be suspect.

Phone numbers should also be easy to identify as fakes. Numbers that start with 555, even if the zip code is valid, means you can’t reach the customer with questions – or concerns.

Orders with multiple declined transactions

Fraudsters may use an eCommerce site to test cards and see if they are valid and available for use. To do this, they’ll place and order and try multiple cards until one works. Limiting the amount of declined transaction for an account in a given time period can help prevent a criminal from using a stolen card, and gives you the time to investigate if the transaction is real or fake.

It’s worth repeating that an auto-decline, on its own, is not a cause for alarm or even a reason to terminate the sale. But if combined with another red flag – for instance, rush shipping or invalid contact information – it bears a closer look. Consider using the decline as an opportunity to directly reach out to the customer by phone. This gives you the chance to validate their contact information while offering an opportunity to provide excellent customer service, should the transaction be a valid one.

Recognizing that a combination of signs can signal the threat of a fraudulent transaction can be an important first step in avoiding getting caught in a criminal’s plan. It’s critical to use that signal as an opportunity to investigate further and only as a potential indicator of trouble. By recognizing the warning signs, and taking actions to validate questionable transactions, online retailers can catch credit card fraud in processes while still serving valid customers.

About the author:

Rafael Lourenco is the VP of US Operations at ClearSale, a Card-Not-Present fraud prevention operation that protects e-commerce merchants against chargebacks. The company’s flagship product, Total Guaranteed Protection, is an end-to-end outsourced fraud detection solution for online retailers. Follow on twitter at @ClearSaleUS or visit

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