Fraud 101

Fraud is an unfortunate fact of life for merchants. This is especially true for businesses like ours that conduct transactions via Internet or telephone. For us, bad actors are not limited by geography. They can place large numbers of fraudulent orders from anywhere, hoping to catch us unaware.

Fail to control fraud and you’ll quickly see your profits disappear. Fortunately, we have a crack team in our credit department who has made it their mission to root out as much fraud as possible. Over the years they have identified a number of signs that an order may be fraudulent. Though it’s likely impossible to stop all fraud, knowing what to look for can cut it down to manageable levels.

Stopping fraud is a collaborative effort. Everyone at Instrumart who handles orders is familiar with ways to identify fraud and are our first line of defense. If they see a sign of fraud, even if it turns out to be a legitimate order, it is investigated. It may take a bit more time but the results are well worth the effort.

Working together with other businesses whether they are colleagues, customers, vendors or competitors is also a successful strategy for stopping fraud. Sharing information and tips, or asking for assistance when it’s needed, can go a long way toward protecting your company.

Signs to look for to identify a fraudulent order:

  1. Large orders that are being shipped UPS RED
  2. Anything over $1,000
  3. Instruments that have a high resale value or would be easy to sell
  4. An individual buying an instrument that should be used for a business
  5. Orders with different “bill to” and “ship to” addresses
  6. Orders with free e-mail accounts or ones that are from foreign countries (e.g. end in .pr or .mx)
  7. If you ask them to call and they continue to contact you by e-mail or they use a relay service
  8. If there are spelling errors or if the flow of the e-mail makes you think that English is not the first language of the sender
  9. If the e-mail is all in caps or lowercase
  10. Late night orders because fraud increases late at night (most fraudulent orders in the US are made between midnight and 2 a.m.)
  11. Ship-to address is a freight forwarder or a hotel
  12. E-mail address:
    • Names that have no apparent connection to customer's name or include random characters could be attempts to mask identity
    • Check e-mail domains carefully. Sometimes a fraudster will buy one that is close to the real companies domain (e.g. linda@harvard-edu.com should be Harvard.edu, or linda@instrmart.com where the u is missing)
  13. Bulk orders for products that are rarely bought in large quantities
  14. Several orders placed by the same customer in a short period of time

Things you can do to help verify if the order is fraudulent:

  1. Google the person or business and verify their name, address and phone number
  2. Use reverse look-up to find out if the information verifies (e.g. at http://www.superpages.com). These kinds of websites can do a reverse check on both phone and address
  3. If you find a different phone number online for the person or business, call that number and ask if they are actually placing the order

Call customer to verify order:

One of the easiest ways to determine that an order is legitimate is to confirm the order with the customer by phone. We often use Google to find the person whose card is being used, and if we find a phone number that is different from the one we were given, we will call that number and talk to them about the order. This is especially good to try for businesses. We will look for the main number of the business on the web, and then call that number and ask to be connected to the person who placed the order. Also, we often reach out to the purchasing or accounts payable department of the company to verify that an order is legitimate. If the customer does not answer the phone, be sure to leave a message. Ask them to call back to confirm the order. You may be dealing with a fraudulent order if the customer does not call back to confirm.

You know that you are dealing with fraud when the customer denies placing the order, the phone number is disconnected, or the person answering the phone has never heard of the customer’s name. The last situation arises when a random phone number is used for a fraudulent order. Sometimes the fraudster will submit the actual phone number of the person whose card was stolen. If the card holder did not authorize the charge, suggest that they call their credit card company to report their card as stolen.

You can also talk to the bank to verify the name and address on the card. If you are suspicious, you can ask the bank if they will contact their customer to verify that it is a good order. Most banks will do this. If you start with the bank's fraud department, you are more likely to get help than just the regular customer service person.