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      Prevent Online Payment Fraud

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      What It Means for Your Business

      Whenever you accept an online credit card purchase, there is a risk of fraud. Scammers use stolen cards or card information to make fraudulent transactions until the legitimate cardholder notices the unusual activity and contacts their bank to dispute the charges. Unfortunately, as a seller, you are held liable for any fraudulent transactions. 

      While the rise of e-commerce comes with an increased risk of identity theft and chargebacks, there are steps you can take to protect your business. We recommend always confirming your customer's information for any online payment to prevent an unfortunate fraudulent event.

      1.  Identifying Red Flags


      When identifying potentially fraudulent transactions, recognizing the common indicators is essential to mitigate risks effectively. Fraudulent transactions often have certain characteristics that stand out from legitimate purchases. Here are some key indicators to watch for:

      • First-time customer
      • Parts transaction
      • The customer will not visit in person (i.e. They are sending a friend or courier to pick up or they are requesting shipment) 
      • Quick sale (Lack of questions about the product or service)
      • Longer than usual conclusion of sale
      • Unusually high transaction value
      • Multiple failed attempts before a successful transaction

      2.  Interpreting risk


      You can use this table to help you decide how to proceed with the transaction based on the red flags surrounding the transaction.

      3.  Taking Precautions to Limit Payment Fraud

      If you see suspicious activity or have received an indicator that a particular transaction has a high fraud risk, here are some precautions to take.

      Uninvasive precautions:

      • Perform a quick check of the information you have on the customer to make sure everything matches up and makes sense. Check the following: 
        • Phone number and area code given: Are they close to you and do they match the customer’s story?
        • Postal code used during payment and the one on file: are they close to you and do they match the customer’s story?  
        • How many times did the customer click the payment link? More than 5 times is unusual.
      • Ask questions to get a feeling: Do the answers hold up and does the story make sense? 
      • Use multiple communications methods: if a customer gets in touch by email, ask for a phone number to call them or text them to “go over some details”. 
      • Don’t deviate from the process to appease a customer who’s in a rush: fraudsters will often be very skilled social engineers and urgency is a key tool they use.

      Invasive precautions: 

      • Arrange a video call with a customer to do a liveness & ID verification: On the call you’ll ask the customer to show you a piece of Government-issued ID and the physical card used in the transaction to validate they match the information in Kimoby.
      • Insist that the customer bring a piece of Government-issued ID as well as the physical card used in the transaction at pick up to validate they match the information in Kimoby. 
        This is the gold standard. 

      What not to do: 

      • Accept photos of IDs sent electronically (by text or email). These can now be easily generated by Generative AI.  
      • Not listen to your gut feeling that something is off with this transaction or not wanting to “make the sale complicated” by taking precautions. Real customers will normally understand, fraudsters will try to make you feel uncomfortable for wanting to take precautions.

      5.  Cancelling the Order

      After all verifications, let's say you've come to the conclusion that you’re likely dealing with a fraudster. If you haven't delivered the service or goods, refund the order. Learn how to refund an order here. You won't gain or lose anything and it's your right to refuse a transaction that can be harmful to your business. If you've already delivered the service or goods, unfortunately, there isn't much to do, but document the interactions you've had with the customer so that in case of a chargeback, the appeal process has a higher chance of success.