5 Tips on Dealing with High-Risk Orders

Online fraud is growing alongside e-commerce itself. Chargebacks alone will cost the industry an estimated $33.79 billion in 2025, and the all-in cost of a single disputed transaction averages around $110. For merchants with thin margins, even a handful of fraudulent orders in a month can wipe out the profit on dozens of legitimate ones.

High-risk orders are most commonly placed with stolen, lost, or synthetic credit cards. The real card owner doesn't authorize the purchase, so the merchant ends up shipping product they'll never be paid for, then fielding a chargeback on top.

How Can E-commerce Merchants Deal With High-Risk Orders?

Every merchant selling online faces the same dilemma: accept a suspicious order and risk a chargeback, or decline it and potentially lose a real customer forever. Neither option feels good.

This tension is worse with friendly fraud, which now accounts for an estimated 61% of all chargeback disputes. In a friendly-fraud scenario, the buyer places an order using their own card, receives the goods, then files a chargeback claiming the item never arrived or was damaged. The order passes all the usual fraud checks because everything looks legitimate up front.

If your chargeback rate climbs above 1%, payment processors flag your account as high-risk, charge you higher fees, and can suspend your ability to accept card payments entirely. At that point, you've lost access to a large portion of your customers on top of the individual losses from the disputes themselves.

How Can E-commerce Merchants Steer Clear of High-Risk Orders?

Shopify's built-in fraud analysis tool gives merchants a starting point. It flags an order as high-risk when:

• the credit card has been reported stolen,
• the billing and shipping addresses don't match,
• the order is for a high-value item,
• the customer's account has a prior fraud report, or
• the IP address is on a known bad-actor list.

Merchants on other platforms need to build their own review process. With over 218 million online buyers in the US alone, no automated system catches everything. The five steps below are a workable framework for reducing fraud without blocking good customers.

5 Tips for Recognizing and Handling High-Risk Orders

Keep in mind that every $100 in fraudulent orders can cost your business $207 once you factor in chargeback fees, lost inventory, shipping, and overhead. A proactive system pays for itself quickly.

1. Recognize the red flags before fulfilling

A few patterns show up repeatedly in fraudulent orders. Check incoming orders against this list before processing:

• orders from countries or regions you don't normally ship to,
• IP addresses that don't match the billing or shipping location,
• rush delivery requests on a large or high-value order,
• billing and shipping addresses that are completely different,
• unusually large order quantities, particularly of items that are easy to resell,
• multiple failed payment attempts before a successful one.

These signals don't prove fraud on their own, but a combination of two or three in the same order is a reasonable reason to pause before fulfilling.

Why chargebacks hurt even when you win

A lot of merchants assume that a successful chargeback dispute means they come out even. They don't. If you accept the chargeback, you pay the disputed amount plus a penalty fee (typically $15-$100 per incident). If you contest it, you spend time collecting evidence and submitting it to your acquirer, who forwards it to the issuing bank. The issuing bank may still rule against you, or push the case to pre-arbitration, which adds more fees and can drag on for months. The math rarely works out in your favor once you account for your time.

2. Use a fraud detection tool to fill in the gaps

The information a customer provides at checkout - name, email, phone - is the bare minimum. Fraud detection tools can cross-reference that data against external sources to give you a fuller picture before you ship.

A good tool will tell you:

• whether the email address is tied to real social or online accounts (profile photo, username history), or whether it's a disposable address from a throwaway domain,
• whether the provided phone number is valid, and whether it's associated with any messaging app accounts,
• whether the customer's IP came from a VPN, proxy, or Tor node, and whether it's been flagged for spam.

Store this data even for orders you fulfill normally. If a chargeback arrives later, enriched customer data is often what tips a dispute in your favor. You can also use patterns from past fraud attempts to fine-tune your own threshold rules rather than relying entirely on the tool's defaults.

3. Review flagged orders before declining them

Automated fraud tools produce false positives. An international customer, a gift shipped to a different address, or an order placed while traveling can all trigger a high-risk flag on a completely legitimate purchase.

Declining those orders on the flag alone costs you real revenue and leaves a good customer with a bad experience. Instead, treat a flagged order as a prompt to reach out. Send a short email asking the customer to confirm the order details and provide a copy of their government-issued ID. Most genuine buyers will respond quickly. If you don't hear back within a few days, that's a better signal to cancel than the flag alone.

Keep a record of your outreach. If the order turns into a chargeback dispute later, documented attempts to verify the customer's identity are useful evidence.

4. Add verification steps at checkout

A few checkout-level controls block a large share of card fraud without much friction for real customers:

• Card verification value (CVV): Requiring the CVV stops fraudsters who only have access to the card number, not the physical card.
• Address verification system (AVS): Checks the billing address the buyer enters against what the card issuer has on file.
• Strong customer authentication (SCA): Multi-factor authentication (MFA), one-time passwords (OTP), and 3DS2 add a layer that's genuinely hard to bypass with stolen card data.

These steps add a few seconds to the checkout flow. That's a reasonable trade for blocking card-not-present fraud, which is where most online chargeback exposure comes from.

5. Educate your customers about fraud risks

Customers who understand fraud are less likely to become victims of it, and less likely to file a chargeback thinking they're fixing someone else's mistake.

A few practical steps:

• Add a short note to your order confirmation email explaining that your store will never ask for passwords or card details over email or phone. This helps customers spot phishing attempts that try to impersonate your brand.
• Let customers know how to recognize a legitimate communication from your store: your sender domain, your actual support address, and how you handle disputes or missing orders.
• When an order is flagged and you reach out for verification, explain briefly why you're asking. Customers who understand why you're checking ID are less likely to be put off by the request.

This kind of customer communication also builds a paper trail. If a buyer later claims they never placed an order, an email thread where they confirmed the order details is strong evidence in a chargeback dispute.

Finding the Right Balance

No system eliminates all high-risk orders. The goal is a process that stops clear fraud without blocking real customers or creating so much friction that your conversion rate suffers.

A combination of the steps above - recognizing red flags early, enriching your data, reviewing before you decline, locking down checkout, and keeping customers informed - gives you the best chance of catching fraudulent orders before they ship, and winning disputes on the ones that slip through.

The final call on any individual order is still yours. Use the signals as input, not as an automatic trigger.