Five Red Flags Of Fraud And What You Should Look For

According to the Federal Trade Commission, businesses suffer from losses due to consumer fraud totaling more than $2.9 billion dollars every year. As a business owner, it’s important to be aware of the red flags of fraud so you can protect your profits. In this blog post, we’ll discuss five key indicators that fraudulent activity may be occurring in orders coming in to your business and what you can do about it.

ship to a holder

A red flag that will happen is when you get an order and the billing and shipping addresses are different. Sometimes when this happens, the shipping address is actually a holder.

When fraudsters buy something with a stolen credit card, they obviously won’t ship the product they purchase to the actual credit card holder so they’ll need to find an address where to ship the merchandise. Typically, they don’t want to ship it to their house in case there’s an investigation they don’t want anyone to be able to trace the order back to them. Instead, they try to ship it to a holder. A holder is someone who would take the item and then then they would pick it up from there or ship it further from there.

A Slightly Different domain Than Popular Web Addresses

When someone comes on your website to place an order they’ll have to input information including their email, their phone number, their name, address, etc. When they put an email with a domain extension that’s slightly different than something you would typically see. It may be close to a domain that’s very familiar to you and so you may be inclined to trust the source if you didn’t realize it was just a little different.

Prepaid Phones

Some bad actors will use prepaid phones, which are very popular today. They secure a prepaid phone so that they have a phone number where they can be reached because companies would call and verify an order. So with a rented phone or a prepaid phone they’ll be reached, it’s a real phone, but this is a red flag..

IP Address

They do the same thing with the IP address they use to access the website and place the order. This would also identify a person where they are located and where they’re ordering from. Today there is VPN (this stands for virtual private network) or proxies that allow you to block your IP address so that no one should be able to see it and when you’re using that, that is also a red flag.

Foreign customers with United States based credit cards

If you have a foreign customer ordering something out of the country and they’re using a US credit card, this is a red flag. Although this does not mean it’s fraud, these are things to look at, especially if you’re a smaller company and you you don’t want to get hit with costs associated with fraud. You want to be cautious and don’t want your company to be taken advantage of.

Speed Of Delivery

Another suspicious signal is when someone places an order looking to get something real quick. That’s a big red flag, especially if it’s a large ticket item. Definitely be cautious if they want one day shipping.

Whenever there is a rush you have to be diligent to make sure that it’s legit.

These are all red flags. This does not mean that these orders are fraud – it’s simply a red flag to look at and to make sure you know what you’re doing.

Stay Vigilant Against Fraud: Protect Your Business and Your Transactions

Detecting fraud and protecting your business from potential losses is critical in today’s online marketplace. By identifying the five red flags we’ve discussed – shipping to a holder address, using emails with domains that are close to popular website addresses, using prepaid phones, concealed IP addresses, and the need for fast delivery of goods – you can become more vigilant and proactive in preventing fraudulent activities. As a payment processor, we are dedicated to ensuring the safety and security of your transactions. By staying informed and taking the necessary precautions, you can help us in the fight against fraud and protect your business from unnecessary risk. Remember, a little extra effort now can save you from big problems later.

Questions About Credit Card Fraud?
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  • Arthur Bergman

    Arthur Bergman, owner of Redstone Payment Solutions Nationwide, LLC, leverages 28 years of diverse payment processing experience. Starting as a hospitality director at a major hotel and restaurant chain, he mastered the intricacies of high-volume credit card transactions, igniting his entrepreneurial journey. Recognizing the need for improved payment processing, Arthur founded Redstone Payment Solutions Nationwide, LLC, anchored in client-centricity. Beyond merchant account setup and competitive rates, he prioritizes enduring relationships built on trust and unwavering support. Arthur's philosophy that "a sale isn't over after the close" drives RPSN, fostering confidence, referrals, and client loyalty. Under his leadership, the company not only expanded but sustained merchant relationships for up to 25 years. Believing in "Life as Art," Arthur considers each merchant's business their masterpiece. Redstone Payment Solutions Nationwide epitomizes his dedication, offering the lowest or no-fee processing. With a rich industry background and unwavering client commitment, Arthur Bergman thrives as a trusted figure in payment processing.