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Why am I seeing fraudulent charges & how to protect against future fraudulent charges
Why am I seeing fraudulent charges & how to protect against future fraudulent charges

Steps you can take to keep your business from being a target for fraud

Updated over a week ago

Online businesses can experience fraudulent purchases for a variety of reasons. Fraudsters are constantly evolving their tactics, but here are some common reasons why fraudulent purchases occur:

1. Stolen Credit Card Information: Criminals may use stolen credit card details to make unauthorized purchases. They often obtain this information through data breaches, phishing schemes, or by purchasing it on the dark web.

2. Carding: Carding is a process where fraudsters test stolen credit card information with small, low-risk transactions to verify if the card is valid before making larger purchases.

3. Account Takeover: Fraudsters may gain access to a customer's account through techniques like credential stuffing (using leaked login information) or phishing. Once they control an account, they can make purchases using stored payment methods.

4. Identity Theft: Fraudsters may impersonate legitimate customers by using stolen personal information, such as Social Security numbers or addresses, to open accounts and make purchases.

5. Friendly Fraud: Sometimes, customers make fraudulent claims about their purchases to get refunds or chargebacks. This is also known as "friendly fraud," and it can be challenging to differentiate from genuine disputes.

6. Synthetic Identity Fraud: Fraudsters create entirely fictitious identities by combining real and fake information to open accounts and make purchases.

7. Proxy Servers and VPNs: Fraudsters often hide their location and identity by using proxy servers or VPNs, making it difficult to trace and identify them.

8. Card Not Present (CNP) Transactions: Online businesses, by nature, involve CNP transactions, which are more susceptible to fraud compared to in-person transactions where the card is physically present for verification.

9. Phishing and Spoofing: Fraudsters send emails or messages that appear to be from a legitimate source (e.g., a trusted online retailer) to trick customers into providing personal and financial information.

10. Chargeback Fraud: Fraudsters may use stolen credit card information to make purchases, receive the goods or services, and then file a chargeback, claiming they never made the transaction.

11. Bot Attacks: Automated bots can be used to place multiple fraudulent orders quickly, overwhelming a business's system and making it difficult to detect and prevent fraudulent purchases.

12. International Transactions: International purchases can be riskier due to differences in payment systems, regulations, and the difficulty of verifying international customers' identities.

To mitigate the risk of fraudulent purchases, online businesses often implement fraud detection tools. If you are an arketa partner with a Stripe Custom account, we already have advanced fraud protection running as we control the settings on these accounts. For those with a Stripe Standard account, check out these resources for more information and to turn on additional protections in your account.

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