How To Avoid Fraud and Disputes

What is fraud?

There are various ways fraud can occur. Often, a fraudulent charge occurs when a charge is not authorized by the cardholder. This usually happens when a card or card number has been stolen. In this case, the charge will be disputed when the cardholder is alerted to the charge or sees the fraudulent charge on their statement. A cardholder will call their bank and the bank will issue a dispute.

What tools does MONEI provide to help with fraud?

MONEI applies multiple Artificial Intelligence powered analysis checks on each transaction. There are also certain cases where your account might have the maximum amount of transactions capped.

What happens if there is excessive fraud on my account?

Though fraud is an unavoidable hazard of accepting payments online, disputes are generally rare. If we see an increase in potentially fraudulent activity or your dispute rate rises significantly, we can reach out to you to help.

Fraudulent charges are an account owner’s responsibility and excessive disputes can affect your ability to accept credit cards as a form of payment and to process payments with MONEI.

It is best to have systems in place to catch potential fraud before it affects your MONEI account.

Identifying potential fraud

Since MONEI users hold the most information about their customers at the time of purchase, users are the best equipped to catch potential fraud. There are many indications that taken together, can point to fraudulent activity.

We will automatically flag payments that appear to be at an elevated risk for fraud. However, you can customize your reviews to catch anything abnormal. Though indicators of fraud can vary depending on the payment method you accept, there are certain things to look out for:

  • Unusually large orders (a large number of items ordered, only expensive items ordered, the same item ordered multiple times, or just a dollar or item amount that seems out of the ordinary)
  • Rush orders and overnight delivery (allows those committing fraud to take advantage of timing)
  • International cards or international shipping addresses
  • High-risk shipping destinations
  • Many small transactions made with the same or similar card number, especially over a short period of time
  • Many transactions made with the same card but different shipping addresses or multiple transactions made with different cards but to the same shipping address
  • Many transactions — including failed transactions — from the same IP address, with different cards
  • Obviously or likely-fake information in an order, including gibberish or spammy email addresses and fake phone numbers
  • Shipping to a freight forwarder
  • Discrepancies in customer information across purchases (for example, if a few orders use the same email address but different names)
  • Multiple failed charge accounts by the same name or email address — declined charges should be regularly reviewed for this valuable information. If each failure is associated with a different card, it’s much more likely that a successful attempt will be fraudulent.
  • Strange and potentially scripted communication. Fraudsters often use certain lines or phrases that come from a script. If communication appears scripted, you can do a quick search for these phrases to learn if they are common fraud script phrases.
  • Requests to split a large payment across multiple cards, especially when those cards don’t share a verified billing address
  • Requests that charges be run manually — this means the charge will run with your local IP instead of their own.
  • Requests to “overcharge” a card and pay out a third party with a different payment method (wire transfer, check, money order, etc.)
  • Requests to charge a card, but provide a refund outside the card network (via check, wire transfer, etc.)

It’s best to reach out to cardholders about a potentially fraudulent charge. Emails that bounce back or phone numbers that don’t connect are a good sign that the charge is fraudulent, as are evasive or indirect answers. Phone and email responses alone do not guarantee that the person responding is the true cardholder.

Additional Steps You Can Take

Providing more information (including the name of the customer, the address, the credit card’s security code, the zip code, the shipping address, and so on) can help to prevent fraud. If we see charges that appear to be more high-risk, we might block the charge or advise you to examine it more closely.

What to look for when accepting donations

  • Make sure the donation makes sense. If you are running a small campaign and receive a large donation from an unknown donor, it might be fraudulent. If you cannot verify the individual, consider refunding the charge.
  • Pay attention to your declines. If many different cards are declined quickly in a short period of time, it could be a fraudster testing many stolen cards.
  • Consider installing a CAPTCHA, which will slow down fraudsters and usually cause them to move on.
  • If an unknown donor makes a large donation and then reaches out to say they only meant to donate a fraction of the amount, be cautious. In order to test stolen card’s limits, fraudsters will often donate large amounts and then ask for much of it to be refunded. In these cases, it might be wisest to refund the entire amount.

What to look out for when selling digital goods and services

  • Customers misusing digital goods
  • Many different accounts using the same (or similar) credit cards and email addresses
  • A large number of charges to the same email address over a short period of time
  • Unexpected or significant changes in charge activity. If there’s a big increase in the dollar amount or purchase frequency, the charges might be fraudulent.
  • Even for digital goods that will not be shipped, you should still collect the CVC, street address, and zip code. Charges that have problems with their CVC or zip are likely to be fraudulent.
  • As you review a charge, view evidence of the transaction, including IP address, email logs, usage logs, etc. 

What to look for when shipping physical goods

  • Review whether or not the billing addresses and shipping addresses match. Non-matching addresses do not necessarily indicate fraud (for example, the customer might have purchased a gift), but should be reviewed. If the addresses match and the customer is using a card from the US, Canada, or the UK, check that the zip/address verification has passed.
  • Customers who ask you to change the shipping address after the charge has been placed. Sometimes fraudsters will use a legitimate address to place a charge, before asking for the items to be shipped elsewhere.
  • Check the card’s country of origin and make sure this corresponds to the billing address. If the shipping address doesn’t match the country of origin or appears to be an unusual shipping destination, take the necessary steps to confirm that the charge is legitimate.
  • Make sure that the shipping methods are appropriate, especially for high-cost overnight shipping. Fraudsters using stolen cards want the goods right away regardless of how expensive shipping is before the card number is reported as compromised or stolen. Do not agree to pay for third-party shipping on your customer’s behalf, as this is usually a front for fraud.
  • If you are shipping to non-verified addresses or high-value orders, consider instituting a 24-48 hour delay on shipping.
  • Check that the shipping label generated by your shipper matches the verified zip code. Often, fraudsters will use a valid zip code and a fraudulent address, and certain systems will auto-fill the zip code from the fraudulent address.

What do I do if I think I’ve found a fraudulent charge?

  • If a review leads you to believe a charge is fraudulent, we recommend that you issue a refund as soon as possible. Use the “refund and report fraud” option on the charge’s page so you can alert us to the potentially fraudulent charge. This helps us improve our fraud detection services.
  • If you do not catch the fraudulent activity or do not issue a refund, the cardholder might dispute the charge with their bank, which will lead to a chargeback. Sometimes the bank will dispute all charges within a certain period until they are able to determine the legitimacy of each charge.
  • If a bank issues a chargeback, it will refund the customer and charge a fee. Then, MONEI will withdraw the full amount of the charge from your account as well as a chargeback fee.

We are always happy to answer any of your questions pertaining to fraudulent activity. Contact us here:  

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