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Preventing Fraudulent Orders and Chargebacks

A Guide for Multichannel Ecommerce Retailers

Fraud and chargebacks can silently erode profits, damage your reputation, and even jeopardize your seller accounts. Whether you’re selling on Amazon, Walmart, eBay, or your own site via Shopify or WooCommerce, proactively protecting your store is essential to sustainable ecommerce growth.

This guide breaks down practical strategies to prevent fraud and minimize chargebacks across all your selling channels.

1. Understand the Common Types of Fraud

a. Stolen Credit Card Purchases

Fraudsters use stolen payment info to place orders. Once the real cardholder disputes the charge, you’re hit with a chargeback and likely lose the merchandise.

b. Friendly Fraud (Chargeback Fraud)

A customer intentionally disputes a valid charge, falsely claiming the item wasn’t delivered or authorized.

c. Account Takeovers

Hackers gain access to legitimate buyer accounts and place fraudulent orders.

2. Use Fraud Prevention Tools on Your Storefront

If you use Shopify, WooCommerce, or any custom storefront:

  • Enable AVS (Address Verification System) and CVV matching
  • Set fraud filters for:
    • High-risk IP addresses
    • Multiple orders from same card or address
    • Orders shipping to high-fraud regions
  • Use Shopify Protect (for eligible orders) or a plugin like Signifyd, NoFraud, or ClearSale

🛡️ Platforms like EcomBiz.AI can flag suspicious orders based on rules or past behavior.

3. Marketplace-Specific Fraud Protection

✅ Amazon

  • Amazon assumes liability for most payment fraud.
  • You are protected if you ship via Amazon and follow their policies.
  • But you may still face A-to-Z claims if customers say items weren’t received or are not as described.

✅ Walmart

  • Walmart protects sellers for most chargebacks, provided tracking is uploaded and orders are fulfilled on time.
  • Watch out for:
    • Late shipments
    • Wrong items
    • Orders fulfilled outside Walmart’s approved methods

✅ eBay

  • Use eBay Managed Payments and ship with tracking to gain seller protection.
  • Upload tracking promptly and respond quickly to claims.

4. Automate Suspicious Order Detection

Platforms like EcomBiz.AI can automatically flag or block orders based on:

  • Suspicious shipping addresses (e.g., freight forwarders or P.O. Boxes)
  • Email patterns often associated with fraud
  • Velocity rules (e.g., multiple orders in a short time from the same IP or payment method)

🧠 With AI-based rules, your system can get smarter over time by learning from fraudulent patterns.

5. How to Respond to a Chargeback

If you do get hit with a chargeback:

  • Submit all documentation:
    • Proof of delivery with tracking
    • Screenshots of product description
    • Customer correspondence
  • Keep records for 6–12 months post-transaction
  • File disputes through your payment processor (Stripe, PayPal, Shopify, etc.)

For marketplace orders, appeal the decision via the platform’s dispute system.

6. Reduce Risk with Smart Order Routing

  • Avoid routing high-value or suspicious orders to unreliable suppliers.
  • Use rules to route questionable orders for manual review or hold.

7. Educate Your Team (or AI System)

Create SOPs or train your EcomBiz.AI automation rules to:

  • Block high-risk orders
  • Require signature confirmation for high-value shipments
  • Auto-reject orders failing AVS or flagged by payment processor

Final Thoughts

Fraud prevention isn’t just about avoiding losses—it’s about protecting your customers, your supplier relationships, and your long-term growth. With multichannel selling comes multichannel risk, and automation is your best defense.

EcomBiz.AI offers built-in fraud detection and order flagging to help you scale with confidence.

👉 Join the Waitlist to automate and secure your ecommerce operations.

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