The Best Tactics for Retail Fraud Prevention

The Best Tactics for Retail Fraud Prevention

The Best Tactics for Retail Fraud Prevention

It’s not just the dollars you lose through fraud, but what it can cost your accuracy down the road. And there’s no better arbiter of your fiscal accuracy than the tax man.

Online retailers are always laboring under the notion that they must stay on the lookout for services that have divined a better way to build a fraud prevention engine. But like every competitive conceit, fraudsters make it their job to stay a step ahead of the latest technology and vetting processes. Ergo, most fraud prevention engines are dated, if not obsolete, by implementation.

Software that detects suspicious behavior and calls out red flags such as individuals or fraud bots ordering from a proxy or new IP address, multiple gift card purchases or billing and shipping that doesn’t match, sometimes over continents, is yesterday’s fraud news.

Today, it’s not only about using manual and algorithmic intervention to sniff out the obvious tells of fraud shops—but doing so in a way that is congruous with the functionality of the rest of your systems.

In 2014, online retailers were shaken down for a record $32 billion, a 28 percent increase from the year prior.1 The jump from 2014 to 2015 is expected to be equally dramatic. The numbers are staggering, but no more so than when it’s your company and P&L sheet that is broken down.

Fraud and chargebacks can often result in headaches for the finance department and, if not tracked in real-time, real problems in the case of an audit. Online sellers are currently under a particular I.R.S. microscope as the number of scams from shell companies trying to pass goods and claim a loss in the form of a chargeback has resulted in added scrutiny to veracious businesses as the online share of the retail market has become prominent.

At Kibo, we combine a fraud prevention engine tailored to your company’s needs with the work of our industry-defining loss-prevention team, which has more than 15 years experience nabbing frauders and tracking trends—so they know what to expect next.

Here are some fraud fundamentals we live by that can help boost your business, keep your P&Ls clean…and make the tax man go away:

  • Make sure the IP address is verified and clean
  • When in doubt, always reach out: Call up the customer on suspicious orders. A hang-up or disconnected signal is a good indicator it’s fraud
  • If the customer does pick up, verify simple information they should know off the top of their head: Name on order, address, nearest cross street, nearest landmark to them (playground, park, school, shopping complex etc.)
  • Look out for multiple orders with the same shipping but different billing as they might be a part of a small ring
  • Orders that are 2x or more above the AOV usually merit closer examination.

Follow these simple rules and combine it with a proven online retailer fraud detection system like Kibo’s, and you’ll be on your way to being free of fraud by tax day 2017.


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