Brief Guide: 5 Indicators of Retail Fraud

Fraud will always follow the money. Right now, online retail stores are where the money is and the fraudsters are trying to get it. Sometimes it can be hard to identify them as they resort to retail fraud 3rd degree tactics that make it hard to notice until it is too late. Experts in detecting this crime however have shared different indicators that retailers need to look out for. Some of them are similar to keeping an eye out for shoplifters in a physical store. Here are 5 indicators you can look out for.

retail fraud 3rd degree

Irregular Shopping Behavior 

Behavior analysis is a very good indicator of fraud. Experts say it is even more important than the identity of the shopper. Like in a physical retail shop where retail fraud 3rd degree is very common, the fraudster is quick about their mission. They will get to your website and zero in on a specific item and take it straight away. Sometimes they will choose low-value items so that they do not raise any suspicion. It is probably hard to do this analysis for every customer, but you can use software or a professional company to identify suspicious behavior.

Mismatched Location and IP Address 

Fraudsters may try to hide their real address or their IP address. You need to seek out such indicators during the transaction. If you realize that there is a mismatch between the two addresses, this should be a red flag that triggers an authentication procedure. You can use a code sent to the user’s email address or phone which they have to enter to continue with the transaction. If it is a fraudulent transaction, the criminal is likely to abandon the transaction because they do not have access to the verification code. It can be compared to walking up to a suspicious person in a store and offering to help them, if they are up to no good, that interaction may make them think twice about proceeding with their fraudulent mission.

Update Your Fraud Detection Strategies 

There is software and there are third-party vendors who can help you detect fraud better. Since the criminals are constantly looking for new ways to go undetected, you need to try and keep up or better yet, be a few steps ahead of them. updating your detection strategy will give you more indicators that a transaction may be fraudulent. You can also read more about retail fraud so that you find out what new tactics are being deployed by both criminals and the security experts.

Inconsistencies in Information Provided 

Sometimes the indicators are right in front of you. Most fraudsters do not take the trouble to be consistent about the information they provide. You will find a person with a name that seems to have no connection to their email address. Although they may be genuine, such inconsistency should trigger an authentication process to find out more about the user. The physical addresses provided should also be probed. Some of the delivery addresses are to the middle of nowhere because the criminal is planning to file a chargeback. Verify addresses and if possible only accept deliveries to physical addresses that can be proven.

Deviation from Normal Patterns 

When dealing with a regular user, you can notice a trend. They usually spend within a certain range and they purchase particular products from your store. If inexplicably the same user seems to be purchasing a product higher than normal or the things they are purchasing are different from what they usually do, then there is a chance that someone else is making the purchase and it may be a fraudster. Automated tools can keep track of patterns and send alerts whenever there seems to be a break from the usual pattern of shopping.

Generally, you need to be always on the lookout. There is a constant evolution of online fraud so what you establish today may not be enough tomorrow. Investment in tools that will keep your retail store safe is a good idea because you cannot keep an eye out manually especially if you have so many transactions always going on.


Consider hiring the services of professional online security providers to help you fight fraud. The retail industry has lost millions of dollars to different fraudulent transactions and as more online merchants tighten their security, the chances of being a victim rise for the businesses that have not improved their security. Regular analysis of your site’s safety is important and you may not be able to do that on your own. Remember that if users identify your site to be prone t attacks, they are likely to stay away from it and look for sights that can guarantee their safety. Do not wait for the fraudsters to strike, you can stop them as they try to instead.

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