Managing Shopify high risk orders is a constant challenge for retailers. Fulfilling them comes with the risk of chargebacks and financial loss, while rejecting them may turn away a legitimate customer. Striking the right balance between fraud prevention and customer experience is key. Here’s how you can effectively handle these orders.
A high-risk order on Shopify is an order carrying a high potential of being fraudulent. It earns its flag due to inconsistencies with billing and shipping address and purchasing behavior, or other signs which may suggest that the buyer may not be the lawful cardholder. Merchants who process such orders without checking for verification risks possible chargebacks.
High-risk orders can result in thousands of dollars of loss for the Shopify store due to the costs of products or services, shipping, and chargeback penalties.
Here are some common types of high-risk orders on Shopify that can alert you to possible instances of fraud or disputes:
As an owner of a Shopify store, you are enabled with built-in fraud detection tools that are designed to catch potentially fraudulent orders. The tools are dependent on your Shopify plan and the type of transaction. Well, the moment an order is placed, a scan is done where Shopify looks closely to find signs of fraud.
These indicators may include:
Merchants should always survey any order suspected to be fraudulent or flagged for fraud by Shopify with a warning next to the order number. To assess risk, go to Fraud Analysis in the order page, where fraud indicators are shown in three colors.
Note: Fraud Analysis does not point to the likelihood of an order being fraudulent, but rather highlights certain parameters that Shopify considers either legitimate or potentially suspicious based on its fraud analysis. Merchants can check the fraud recommendation presented for the order to assess the likelihood of fraud.
For merchants who have either the Shopify Payments services or are in the Shopify Plan and above, fraud indicators- as well as the fraud recommendation for each order- are visible. The recommendation gives a good estimation of the overall order’s risk level, and will help businesses decide better whether to fulfill, verify, or cancel the transaction.
The fraud recommendation labels the chargeback risk for an order as low, medium, and high. Orders rated medium and high on risk will be marked on the Orders page. The risk levels should give the businesses more insight into their transaction decisions.
Shopify’s generation of these recommendations stem from machine learning algorithms that sift through historical transaction data found throughout all Shopify stores in order to identify patterns and trends indicative of fraud. To stay in front of the constantly changing threats, Shopify will improve the accuracy of these algorithms continually on the basis of new fraud data and reports provided by merchants.
A third-party fraud detection application integrated by the merchant will render an application with respect to Shopify’s fraud control for that order, indicators, and recommendations.
Shopify’s built-in fraud analysis tool evaluates each order based on risk factors like mismatched addresses, multiple payment attempts, and proxy IP usage. Orders are marked as low, medium, or high risk based on Shopify’s assessment. Carefully review the fraud indicators provided in the order details.
Pay special attention to red flags, such as multiple failed transactions or an IP address from a different country than the billing address. If the order is high-risk, proceed with further verification before fulfilling it.
Manually inspect the order details to spot inconsistencies that might indicate fraud. Compared to the billing and shipping addresses, fraudulent orders often have different locations. Check the IP address to see if it matches the buyer’s location. Validate the email and phone number, a fake or disposable email is a red flag.
Analyze the order value, a large order from a new customer or one with multiple expensive items may require extra scrutiny. Identifying these patterns early helps prevent fraudulent transactions.
Reach out to the customer using the phone number or email provided in the order. Politely ask them to confirm order details, such as their shipping address or the last four digits of their credit card.
If the customer is legitimate, they will usually respond and verify the information. If the email bounces back, the phone number is invalid, or the customer refuses to cooperate, it’s a strong sign of fraud. Keep records of all communications in case a chargeback dispute arises.
If an order appears suspicious, request extra documentation from the customer. This could include a photo ID or a credit card image with sensitive details hidden. Genuine customers will typically understand these security measures, especially if you clarify that they are in place for their protection.
For high-value or suspicious orders, it’s best to delay shipping until verification is complete. Hold the order for 24–48 hours to allow time for additional checks.
If the order is paid via credit card, watch for any disputes or chargebacks before dispatching the product. If the order was placed using an address known for fraudulent transactions, reconsider fulfillment. Shipping a fraudulent order can lead to revenue loss and inventory depletion.
When the red flags still multiply, even after going back to verify it, it is much wiser to cancel the order. In Shopify, you can easily undo the payment and inform the customer through mail. A proper explanation will be that the order was not processed due to security concerns.
Avoid fulfilling high-risk orders, since they mostly cause chargebacks and lost income, in addition to other charges. Long term, fraud-prevention is what’s really going to save your business.
For even more complex fraud protection, consider connecting third-party fraud detection apps from the Shopify App Store. These apps use AI-driven risk assessment, machine learning, and real-time fraud monitoring and detection processes, making it safer and more accurate to find a suspect in a transaction.
One of the best in its class for preventing fraud is Blockify Fraud IP Blocker. This app enables merchants to:
While Shopify’s fraud analysis is effective, no system can entirely eliminate fraud. To minimize risk, merchants should take proactive steps such as verifying customer details and integrating additional fraud prevention tools.
As a result of fraud infusion orders, the credit card of the victim customer can be charged back, hence, incurring losses on your side and possibly harming the standing of your account with your payment processor.
Chargebacks due to fraudulent transactions are not automatically refunded to merchants by Shopify despite providing fraud detection tools.
Conclusion
It is vital to manage high-risk orders on Shopify in order to protect your business from fraud and chargebacks. Fraud analysis on its own is not enough; therefore, it should be supplemented with another level of protection by manual verification.
Save time and money by being proactive, looking over orders flagged as suspicious, and using fraud protection tools. You should be able to adequately secure your store, and at the same time, have a smooth shopping experience for honest shoppers with the right precautions.
