5 Reasons Your Community Could Be Your Best Defense Against Fraud

For decades, maybe centuries, groups of neighbors have rallied together to form community watchdog groups. Through their combined strength, these watch groups have found success stopping criminals that might otherwise hit them close to home.

The sense of security we get from a community is palpable. Online, communities have found their own purpose, especially in the world of ecommerce.

At 3dcart, our customer community helps drive product development. Some happy customers go as far as becoming evangelists of sorts, spreading the word about our solution to other merchants and aspiring storeowners.

Most recently, we’ve worked on solidifying the bonds of our community by creating our own community watch group. As part of our recent FraudWatch feature release, we also launched an integral protective wall against fraud: the Community Alert.

The Community Alert sources information from other 3dcart merchants to calculate the risk of a transaction. Storeowners report instances of fraud into the system, which spits out risk scores in real-time to other merchants in the 3dcart community.

Why should you sign up for Community Alert? Here are five reasons your community might be your best guard against fraud.

1. It’s based on human reporting.

In the days of automation, it’s nice to have validation from a real person with real experience. Don’t get us wrong—we think automation is great. But a human touch can be affirming, especially in the sensitive case of fraud.

2. A hard-earned lesson is one worth sharing.

When you’re part of a community, you gain a support group with members who take their personal lessons to heart. This collective experience can help you avoid the same mistakes your neighbors once made.

In some cases, those mistakes may have produced hard-earned lessons, increasing the chance that community members are willing to share them with each other.

3. Solutions aren’t always clear-cut.

Automated software is making more complex decisions every day. But for the most part, the decisions it makes are pretty clear-cut. It can’t take every factor into account. A real person, however, can analyze information to find more complex solutions. They can make suggestions for proceeding that no software can.

And this is why…

4. Qualitative analysis helps you make a more informed decision.

Automation typically returns mathematical answers based on probability. But community members can tell stories, offer opinions and explain why they made certain decisions more thoroughly than computers.

When it comes down to it, an automated fraud alert can’t always why a transaction is risky. Information sourced from a real person, on the other hand, may include an explanation, offering helpful information to guide your hand.

5. A community fosters trust.

Trust is so important in today’s business. A community of like-minded people with similar goals fosters its own sense of trust. As a result, you’ll feel (and actually become) a more secure business.

A trusting community is a valuable commodity. Find the trust you need to make your business better by getting started with a community like 3dcart’s, including more than 16,000 online merchants who know ecommerce.

Check out Community Alert today.

Community Alert is a great resource for 3dcart merchants. Contact support@3dcart.com today to sign up for FREE for the beta launch.

Jimmy Rodriguez+

CTO and co-founder of 3DCart, developer of an e-commerce suite for businesses of all sizes. As an authority on e-commerce best practices, Jimmy combines more than 10 years as an e-commerce developer and web programmer with SEO, social marketing and business intelligence

4 Common Elements of Fraudulent Orders

Fraud can follow an online merchant around for a long time. It’s a huge hassle to correct and an even bigger drain on your pocketbook.

Fortunately for online storeowners, today’s technology makes fraud easier to identify. We’re now equipped with tools that simplify the process of identifying and outing a fraudster. Some of these tools also make it easier to share your experience with other merchants in your community.

3dcart recently launched FraudWatch, a new security add-on. It combines data points into an algorithm that calculates the likelihood of fraud for each purchase in your store. It also leverages the experiences of other 3dcart merchants into a Community Score.

Merchants on other platforms can still dole out their own brand of street justice. Here are four elements you should look for in a fraudulent order. (TIP: A fraudster typically fulfills more than one of these.)

A foreign or proxy IP address could belong to a fraudster.

IP addresses are major identifiers for Internet users. These days, they can help marketers locate where in the world their customers come from, among other benefits.

Because IP addresses are easy to trace, a fraudster usually makes sure his is invisible. By using a proxy IP address, a thief can block you from identifying his location.

In some cases, foreign IP addresses are equally as dangerous. It’s too difficult to take legal action against a thief in Europe, for instance, when you’re based in North America.

Location plays a role in fraud identification in other ways, too.

Billing addresses and shipping addresses that don’t match are suspect.

Not every shopper who comes through your store will have matching billing and shipping addresses. In many situations, this happens when a customer sends a gift. In others, it could be that your shopper has more than one address.

The truth is that there are plenty of reasons why a shopper might give different addresses. But if the purchase fulfills other potential fraud conditions, it might be worth a closer look.

Why a fraudster might use different billing and shipping addresses is pretty simple to figure out. Just make sure you do your due diligence before you cancel a purchase.

One final location-specific data point is crucial for fraud detection.

Double-check phone numbers with area codes that differ from the shipping address.

For many of the same reasons as above, this is another data point that might identify a fraudulent purchase.

Online identity theft is a regular occurrence. A fraudster could very easily pull credit card and address information. Then, he might give a fake phone number. If you’re worried that they don’t match, it’s usually a good idea to look at some of the other data points in this list. As always, you’ll want to build a comprehensive case before you decide to block a purchase.

Be wary of above-average order amounts from first-time customers.

Large orders can be exciting for an online store. But they aren’t very likely, especially with new customers who want to try out your store before they make any big purchases.

A large order, however, can be a sign of a fraudster trying to get a one-time purchase in before the victim cancels his or her credit card. Today’s real-time alert system for credit card fraud helps consumers identify issues quicker. As a result, fraudsters typically understand that they get one chance to use the card, so they’ll maximize that purchase.

Conduct safe business.

As always, make sure you’ve identified multiple data points that might be fraud before you block a purchase. You don’t want to risk alienating a customer. But you do want to protect your store.

Read more about FraudWatch for a low-hassle way to stop fraud before it happens.

Gonzalo Gil+

Gonzalo Gil is the CEO and Founder of 3dcart, the leading hosted ecommerce provider for businesses of all sizes.