Fraud Detection

Overview

Payment fraud costs e-commerce merchants 2–3% of revenue through chargebacks, lost goods, and dispute fees. Effective fraud detection layers platform-native risk scoring, 3D Secure authentication, velocity checks, and manual review queues for suspicious orders. The right approach depends on your platform — Shopify includes a built-in fraud analysis tool, while WooCommerce and BigCommerce require a dedicated fraud prevention service or payment processor's fraud tools.

When to Use This Skill

• When chargeback rates exceed 0.5% of transaction volume (Visa's threshold for "excessive" disputes is 0.9%)
• When launching in a new market with unfamiliar fraud patterns
• When selling high-value, easily resold goods (electronics, gift cards, luxury items)
• When you observe account takeover patterns, card testing, or bulk bot purchases
• When building or auditing a checkout flow that processes card-not-present transactions

Core Instructions

Step 1: Determine the merchant's platform and choose the right fraud tools