If you sell products or services online, one way to prevent fraudulent orders is to implement anti-fraud detection into your shopping cart or web site. There are several subscription-based services out there and many are designed to integrate into existing cart systems.
They take the details of an order -- customer contact information, phone, address, etc. -- and cross reference it with the information for the credit card provided (including name and billing address for the card, Bank identification number, etc) -- and finally cross reference all of the data against the user's physical location on the Internet, as well as the ISP they are connecting through (to filter out anonymous proxies).
For example: If someone orders using a U.S. credit card, but they are doing so from an ISP in Europe, the fraud detection service considers that a potential threat. If a customer is using a credit card with billing information and bank identification information in Florida, but they are connecting to your site from an ISP in Seattle, Washington, the fraud service will let you know that as well.
All of the information is tabulated and worked down to a simple 'fraud score' which is then passed back to the merchant, along with all the details. If it's a low number, chances are the order is legit. If the number is high, chances are it's a fake order/fraudulent. If it's somewhere in-between, the merchant should pick up the phone and contact the customer directly
Canvas Dreams uses a service like this (called Max Mind) for our hosting signup forms, and it has been near-flawless at identifying whether a customer is legitimate or fraudulent. Max Mind is available at a very affordable monthly rate that is based on the number of fraud checks you need to perform in that given month. You can learn more about it here:
http://www.maxmind.com/
There are many other ways to defend your business against fake online orders, but a tool like this can really take out the guesswork in the overall fight against fraud.
Sincerely,
David Anderson
Principal, Canvas Dreams LLC
