How To Deal with High-Risk Orders on Shopify 
February 14, 2023
As an eCommerce business owner, you're bound to come across high-risk orders from time to time. These are orders that have a higher chance of resulting in chargebacks, fraud, or other issues that can harm your business. With this Covid-19 pandemic, online sales skyrocketed and this opened a new window of opportunity for fraudsters.
According to a 2021 survey of online merchants from across the globe, 75% of the participants reported an increase in fraud attempts while 72% voted for a net rise in fraud rate by revenue since the beginning of Covid-19. Also, security breaches in the industry caused an estimated USD $20 billion in online payment frauds.
Dealing with high-risk orders can be a challenge, but it's important to have a plan in place to protect your business and your customers.
In this article, we'll show you how to deal with high-risk orders on Shopify. Let's get started!
What are High-Risk Orders on Shopify?
A high-risk Shopify order is an order that has a higher chance of resulting in chargebacks, fraud, or other issues that raise red flags. Some of the common factors that make an order high-risk include:
Unusual shipping or billing addresses: Orders that have a shipping or billing address that doesn't match the customer's usual address can be a red flag.
Unusual order patterns: Orders that are significantly different from a customer's usual order patterns can be a sign of fraudulent activity.
High-value orders: Orders with a high dollar value are more attractive to fraudsters.
Suspicious email addresses, and payment cards: Email addresses that are misspelled or look suspicious can be a red flag. Also, the credit/debit card used for payment has been flagged as lost, stolen, or fake.
Orders from high-risk countries: Some countries are known to have higher rates of fraudulent activity, so orders from these countries may be flagged as high-risk. Also, verify the IP address to make sure the order is not suspicious.
How to identify high-risk orders on Shopify?
The first step in dealing with high-risk orders is to identify them. Fortunately, Shopify has several tools that help you identify high-risk orders. One of the most useful is the Shopify fraud analysis tool, which automatically reviews each order and assigns a risk level based on various factors.
[Note: If you're on the basic plan and are not using Shopify Payments, then you don't see the risk rating, but you can still see indicators.]
These indicators are of 3 colors i.e. Red, Green, and Grey which highlight different behavior.
Green indicators - These indicate the order information is legitimate.
Red indicators - These indicators are for details that are usually seen on fraudulent orders and alerts about the high risk of fraud.
Grey indicators - These give you additional information about the orders which can become handy.
You can also use Shopify fraud prevention apps to help you identify high-risk orders. In addition to these tools, there are several things you can do to manually review orders for potential fraud:
Verify the billing and shipping addresses: Make sure that the billing and shipping addresses match and that they are valid addresses.
Check the order history: Look at the customer's order history to see if there are any unusual patterns or if the order is significantly different from their usual orders.
Verify the email address: Check the customer's email address to make sure it is a valid address.
Verify the payment method: Check to make sure the payment method is legitimate and that the customer is authorized to use it.
What to do when you receive a high-risk order?
If you receive a high-risk order, it's important to take action quickly to protect your business and customers. Here are some steps you can take:
Review the order details: Review the order details before deciding to decline it. This will give clarity about the customer and what goods they have ordered.
Contact the customer: If you're unsure about the order, contact the customer to verify their information and ask for additional details.
Delay shipping: If you suspect fraud, delay shipping the order until you can verify the information with the customer.
Cancel the order: If you determine that the order is fraudulent, cancel it immediately.
Report the fraud: If you suspect that the order is part of a larger fraud scheme, report it to the appropriate authorities.
Preventing high-risk orders is much easier than dealing with them after the fact. Here are some steps you can take to prevent high-risk orders on Shopify:
Use fraud prevention tools: Use the fraud analysis tool in Shopify and other third-party apps to help you identify high-risk orders.
Verify customer information: Make sure that the customer's information is accurate and matches their billing and shipping addresses.
Use payment verification tools: Use payment verification tools like CVV verification to help prevent fraudulent payments.
Monitor order history: Monitor your customers' order history to look for unusual patterns or orders that are significantly different from their usual orders.
Implement a fraud prevention
How to Manage Chargebacks on Shopify?
Even if you take all the necessary steps to prevent high-risk orders, you may still experience chargebacks. Chargebacks occur when a customer disputes a charge and requests a refund from their bank. Chargebacks can be costly and time-consuming for your business, so it's important to have a plan in place to manage them.
Here are some steps you can take to manage chargebacks on Shopify:
Respond promptly: When you receive a chargeback notice, respond promptly and provide all the necessary documentation to support your case.
Provide excellent customer service: Make sure that your customers are satisfied with their purchase and that they have a positive experience with your business. Happy customers are less likely to file chargebacks.
Monitor your chargeback ratio: Keep an eye on your chargeback ratio and take steps to reduce it if it's too high.
Best Practices for Fraud Protection on Shopify:
Use Fraud Analysis Tools: Shopify provides a range of tools to help you identify and prevent fraud. Some of these tools include order and risk analysis, IP geolocation, and device fingerprinting. You can also use third-party fraud analysis tools that integrate with Shopify to get even more protection.
Set Up Fraud Filters: Fraud filters are customizable rules that you can set up to automatically flag high-risk orders. These filters can be based on a range of criteria, including the value of the order, the location of the customer, and the payment method used. By setting up fraud filters, you can quickly identify potential fraud and take action to prevent it.
Use Strong Passwords: One of the most common ways that fraudsters gain access to Shopify stores is through weak passwords. Make sure that you and your team are using strong, unique passwords and two-factor authentication to protect your accounts.
Verify Orders Manually: While fraud analysis tools can be powerful tools, it's always a good idea to manually review high-risk orders. This can help you identify any red flags that the tools might have missed and take appropriate action.
Use Secure Payment Methods: Shopify supports a range of payment gateways, many of which offer additional fraud protection features. Make sure you are using a secure payment method that includes features such as fraud detection and chargeback protection.
Dealing with high-risk orders on Shopify can be a challenge, but it's an essential part of running an eCommerce business. You can protect your business and your customers by taking steps to prevent high-risk orders and managing chargebacks effectively. Use the tools and strategies outlined in this article to help you identify and manage high-risk orders on Shopify.
Frequently Asked Questions (FAQs)
What is Shopify Fraud Detection?
Shopify fraud detection is a set of tools and features that help merchants identify and prevent fraudulent orders on their online store. These tools include order and risk analysis, IP geolocation, and device fingerprinting.
What is Shopify Risk Management?
Shopify risk management is the process of identifying and mitigating risks associated with running an online store. This includes risks such as fraud, chargebacks, and data breaches.
What is Fraud Analysis in Shopify?
Fraud analysis in Shopify is the process of analyzing orders to identify potential fraud. This analysis may include factors such as order value, customer location, and payment method. Shopify provides a range of fraud analysis tools to help merchants identify and prevent fraud in their online stores.