Fraud prevention checklist – Comprehensive guide to safeguarding your online business

Fraud prevention checklist

In the fast-paced world of e-commerce, the convenience of online transactions comes hand in hand with the increasing risk of fraudulent activities. As an online business owner, safeguarding your enterprise against fraud is vital to maintain customer trust and ensure the longevity of your business. Implementing a comprehensive fraud prevention strategy is crucial in this digital age.

Red Flags to Watch Out For

Prior to delving into measures for preventing fraud, it’s crucial to identify red flags. There are certain consistent signs that can indicate possible fraud.

Some key red flags to watch out for:

  • Transaction velocity
    • Total amount in multiple transactions that exceeds the norm within a short period of time.
    • Multiple purchases of the same item in quick succession.
    • Unusually high number of transactions within a small window of time.
  • Large order amount or quantities
    • Total amount of a transaction is bigger than the average purchase amount.
    • Large number of the same item being ordered.
  • Address mismatch
    • Shipping address and billing address are not the same.
    • Using a P.O. Box address for the shipping.
    • Shipping to a shipping forwarder address.
  • Free email address or disposable email address
    • First-time customers using free email address or disposable email address.
  • Multiple credit cards being declined, a.k.a. carding attempt
    • Multiple credit cards being declined for a single purchase.
  • Expedited shipping
    • Unnecessary requests or payments for expedited shipping.
  • Anonymous proxy or VPN
    • Users using anonymous proxy or VPN to hide their actual locations.

Fraud prevention checklist: 10 steps to secure your online store

Fraud prevention is vital for running an online business, and implementing a thorough checklist can greatly minimize the risks related to fraudulent behavior.

Below is a fraud prevention checklist detailing key measures to shield your online business.

Authenticate Buyers Identities

  • Perform detailed checks on customer information, particularly for high-risk transactions.
  • Utilize address verification systems (AVS) and request additional verification like 2FA if needed. E.g., SMS verification.
  • Consider using the FraudLabs Pro’s SMS Verification solution which can be used to send One-Time-Passcode (OTP) to the buyer’s mobile phone for verification purposes.

Choose A Secure Payment Gateway

  • Use trusted payment gateways equipped with strong security features.
  • Ensure that your payment processor adheres to the Payment Card Industry Data Security Standard (PCI DSS) to protect sensitive financial data.

Monitor Suspicious Activity

  • Establish automated systems to oversee transactions for any irregular patterns or discrepancies.
  • Any unusual behavior, like repeated failed login attempts or sudden alterations in shipping addresses, could indicate potentially fraudulent activity.

Use Geolocation Services

  • Utilize IP2Location geolocation services to verify the location of the user’s transaction.
  • Utilize IP2Proxy VPN detection services to verify if users are behind VPN.
  • Any purchase from an unfamiliar location, different from the customer’s typical activity, may indicate a possible fraud.

Educate Your Staff

  • Train your staff to recognize and respond to potentially fraudulent activities.
  • Equip them with the knowledge to identify phishing attempts, social engineering tactics, and other common fraud schemes.

Use Fraud Prevention Services

  • Use fraud prevention services that specialize in detecting and preventing online fraud.
  • These services frequently employ sophisticated algorithms and machine learning to pinpoint suspicious transactions, like purchases made using stolen credit cards or from a location with a high-risk factor.
  • E.g., the FraudLabs Pro fraud screening service is a proven solution that protects thousands of online merchants from fraudulent orders.

Establish Clear Policies

  • Establish your business’s policies clearly, especially those concerning refunds, chargebacks, and account access.
  • Transparent policies not only discourage potential fraudsters but also establish a clear guideline for genuine transactions.

Regularly Update Security Software

  • Ensure your website’s security software, such as firewalls and antivirus programs, is kept up to date.
  • Consistently patch any vulnerabilities and install security updates to safeguard against identified threats.

Conduct Regular Audits

  • Regularly perform internal audits on your security protocols and systems to proactively detect and resolve any potential vulnerabilities.
  • Any unused software and components should be uninstalled to prevent potential compromise of the system.
  • It is essential for businesses to stay updated on current fraud trends and enhance their fraud prevention strategies.
  • This involves participating in industry events, subscribing to newsletters and publications, and connecting with fellow business owners to stay informed.


Merchants must always take security seriously as any fraud orders that get through will mean financial penalties in the form of chargebacks or refunds. That is not great for your business growth.

By following the above measures, you can greatly improve your online business’s security and lower the chances of experiencing fraud. Taking a proactive and watchful stance on fraud prevention safeguards your business and helps establish trust with customers.

If you’re operating a small online store with up to 500 orders per month, then you’ll be glad to know that FraudLabs Pro has got your back. FraudLabs Pro has a free Micro plan that can help small businesses perform fraud screening for up to 500 orders per month.

That’s a great way to get started with protecting your online store against fraudulent orders that can mess with your bottomline. Online merchants can rest easy once FraudLabs Pro is actively screening all orders as the comprehensive checks done will quickly unveil any fraud attempts.

Free Fraud Protection Today!

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