Practical Ecommerce

Fraud on the rise?

2011 so far has been the year of fraud and theft for us. In the last five years we’ve had 1 maybe 2 fraudulent orders. This year so far we’ve had three. Just last week three customers called to tell us that even though UPS shows their package was delivered, they never received it. They think their items were stolen. I never knew there was a black market for wedding and baby shower favors!

We’ve been lucky in the past; we haven’t had to deal with these issues. Now that we have had so many in such a short period of time we had to come up with a plan to protect ourselves.

We now double check all orders. If the AVS or CVV don’t match we don’t process until we can confirm the information with our customer. Even if the customer placed the order over the phone, we still call them back if the information doesn’t match. This is probably obvious to most merchants. We typically did check this in the past, but some did get through.

We came up with a standard email that explains what we need, and we typically call the customer too. This means a lot more time on the phone or in our email. But that’s okay! If we can verify the information we know it is a real order and we can proceed. If they don’t return our calls or our emails after 24 hours the order is cancelled.

At first I worried that this would upset our customers. But so far only one customer was upset. She felt her billing address wasn’t any of our business (long story). The majority of our customers have been very grateful that we are taking the time to confirm that they are indeed the card holder.

Stolen packages are a different story. I’m not sure what to do to prevent this. Once our orders are given to UPS it is really out of our control. We do state in our policies that we suggest orders be shipped to an address where someone will be home, but I know not every customer reads our policies before placing an order. Right now we are learning as we go on this one. We don’t require signature on packages, this may be something we need to do if the theft continues. Our suppliers have been wonderful in helping us file a claim and even sending replacements at no charge, although they tell me they don’t always do this. If we have more stolen packages they won’t always send out the replacements.

What is your policy on this? I would really love some input from other Merchants on your policies on stolen packages and on preventing fraudulent orders.

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Comments ( 10 )

  1. Rainebrooke March 3, 2011 Reply

    I’ve had the same problem 2 times this year with "supposedly" stolen packages. I’m simply screening potential problem orders a little more now. If billing/shipping addresses don’t match, if the order is going to an apartment, etc… I simply send it with signature required.
    Not sure what else could be done except to watch for orders where a package may have the potential to sit out and actually get stolen, or claim to have been stolen, and if an address has this potential problem, require the signature.

  2. Kara English March 3, 2011 Reply

    Thank you! We are also trying to screen the orders better. Sadly not all of my suppliers will let us require a signature on packages. Some of them charge us up to $5.00 for this service. It is worth the money, but sometimes hard to convince the supplier that we have to have it.

  3. Elizabeth Ball March 3, 2011 Reply

    I request customers to have their packages sent to a post office box for a couple of reasons. One, it is more secure, and two, people may and do move addresses but they keep a PO Box address for years – which helps with remarketing campaigns down the line.

    As well, since many customers buy my products as gifts for their partner I suggest that they can keep the gift a surprise by having it sent to their own workplace. Again, the added bonus is that they usually open it and show their colleagues who may want one for themselves. I cannot tell you how many times I’ve received a new order from the same workplace in a matter of days after the first customer has received theirs.

  4. Kara English March 3, 2011 Reply

    Thanks Elizabeth! I love your idea of sending items to theworkplace! That is a wonderful way to get referrals. I will try to push that option more with our clients.

  5. Larry March 5, 2011 Reply

    Thats a tough one Kara. I aways keep my customers informed by watching the UPS tracking. I know USPS tracking stinks. I don’t use it for that reason.
    The one thing I do is Email my customer the day befre it’s due to arive and say "This is a friendly reminder that your order from ………. is due to arive on the next days date"

    Many customer thank me for that :)

  6. Kara English March 17, 2011 Reply

    Thanks Larry that is a great idea. I think I will try to do something like that, or take advantage of UPS Quantum View that will notify customers not only that their order shipped, but also that it has been delivered.

  7. StrikeHawk eCommerce, Inc. March 27, 2011 Reply

    Does your ecommerce software allow UPS shipping insurance as an elective? Can it also allow them to select to require signature? Do you employ maxmind or authorize.net fraud screening?

  8. Kara English March 29, 2011 Reply

    We do not use authorize.net, and we drop ship most of our orders so we don’t have any control over UPS shipping insurance, or signature requirements.

  9. Gena Cornett April 12, 2011 Reply

    I recently had a "customer" report that her package arrived empty (but untampered with). She claimed it must have shipped empty from the warehouse, but she didn’t want a replacement, just a refund. The package weighed over 2 lb when shipped, so the product didn’t just mysteriously disappear out of the untampered with package.

    When asked for a photo of the bag, she said "I threw it away" even though we told her to keep it for the Fedex claim. No, she didn’t get a refund, even though she emails (with extravagant use of question marks and exclamation marks) every few days. Sigh. This seems to be the latest scam, to claim the package arrived empty, since it’s hard to defend against even with tracking.

  10. iPhone Application Development October 10, 2011 Reply

    It is the worth thing, Kara. I think you have to modify your management system especially for package delivery. As we all know as facilities increase same way the level of fraud increase nevertheless we have to do business by providing 100% customer satisfaction because after all customer is in our core area. Simple modification can help to remove such fraud activates. Thanks for sharing. Keep it Up.

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