The holidays are a time of gift giving to family and friends, but, for criminals, it's also the best time of year to take advantage during the busiest shopping time of the year.
With the high volumes of Black Friday and Cyber Monday sales, online shoplifting via stolen or unauthorized credit card use peaks during this time of the year.
However, there are ways to protect your store against these bad actors without losing the sales from your good customers.
Here are a couple of guidelines you can use to protect your bottom line against fraud and chargebacks that eat into both your inventory and revenue.
Shopify offers an anti-fraud analysis tool for free on every one of your online orders.
This works by taking the the metadata around the order, such as the billing address, shipping address, IP address, name and credit card billing address into account. It even tracks the customer's device and what type of browser they're using to place the order.
The theory is, that if these pieces of information don't line up, then the order is possibly fraudulent.
The reasoning is, the criminal who stolen the credit card typically lives far away from the customer's real address.
This isn't always the case – especially during the holidays.
The holidays are also the most travelled days of the year. Your customers are out visiting family, and while they're away from home they're shopping online for gifts. They might even be shipping gifts directly to friends and family.
This raises red flags to anti-fraud apps designed to find and flag orders being sent and purchased in places far from the billing address on the card.
Long story short, don't just blindly reject all high risk orders. You're losing good customers and orders!
If a customer is being flagged as high risk, how can you save the sale and avoid a chargeback? The answer is through verifying an additional piece of information from the customer.
If an order has been flagged, or you have suspicions about it - ask the customer for their Driver's License as a form of ID.
Why a Drivers License? Because Drivers Licenses are official government issued documents, which contain the name and address of the holder.
With a valid Drivers License, you can compare the name and billing address on the order to the name and address on the Drivers License. If these 2 are in sync, then you know you're speaking with the authorized holder of the card.
As a bonus, you now have an ironclad piece of evidence to refute a chargeback, if this customer attempts to file a fraudulent chargeback.
We've built Real ID for Shopify for exactly this reason – we make it easy for you to verify your customer's IDs using a seamless, secure, and tested approach using your buyer's camera-enabled device.
Customer verification, also known as Know Your Customer (KYC) is designed to prevent fraud. While banks use this process to prevent money laundering, you can use these same tried and true techniques to protect your store from credit card chargebacks.