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E-commerce Fraud Detection and Geolocation

E-commerce Fraud Detection and Geolocation

When a customer orders on your e-commerce, he provides you many personal details necessary for his purchase delivery. Among this information, some are not directly available in your administration interface. Our e-commerce fraud detection solution overcomes this shortcoming by capturing this extra information to perform a risk assessment of each order.

E-commerce Fraud Detection using Geolocation

We use geolocation technologies to detect the location of the connection used to make the order. We compare the city of delivery and the city of billing. From the different geographical positions, we are able to calculate the distance between locations. If the distance is not reasonable (more than 50km), then the fraud potential increases.

On the same principle, we can detect where a credit card originated from using the first 6 digits. If the country of the credit card does not match the delivery address, then the risk of fraud increases dramatically.

To go further, the e-commerce fraud detection controls can be configured by the merchant in order to reflect the reality of his business. For example, a French site mainly attract a French traffic and visitors from neighboring French-speaking countries such as Belgium, Switzerland, Luxembourg, etc… This means that with proper configuration, if an order comes from one of these countries, the risk of fraud will not increase.

Case study of E-commerce Fraud Detection

Lets consider two cases to illustrate the impact of geolocation-based controls and the e-commerce fraud detection:

Case 1 : French website selling mainly in France

Information retrieved in the order of the customer:

  1. IP from Rennes (France)
  2. Japanese credit card
  3. Delivery address in Rennes (France)
  4. Billing address in Rennes (France)

Fraud is almost obvious with those information. Without e-commerce fraud detection, only data about addresses are available, so you would probably accept this order. Clearly we can see that the control of the credit card is essential to effectively fight against fraud.

Case 2 : Quebec website selling Canada and France

Information retrieved in the order of the customer:

  1. IP from São Paulo (Brazil)
  2. French credit card
  3. Delivery address in Montréal (Canada)
  4. Billing address in Montréal (Canada)

Without e-commerce fraud detection solution, everything seems to indicate that this is a completely normal order done by a French immigrant living in Montreal. However, the IP geolocation indicates that the transaction was made with a Brazilian connection. The IP control allows us to assume that is is a credit card theft.

Conclusion

Geolocation of an order provides crucial information for the risk assessment. Thus, combined with a fine and adapted configuration, our e-commerce fraud detection system allows you to correlate your data to effectively fight against fraud.

Furthermore, geolocation controls can be integrated with other types of controls to further improve the accuracy of risk assessment of fraud. We’ll talk about these other e-commerce fraud detection means in future articles.

→ Consult our e-commerce fraud detection offer

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