Recently, we got an appeal for help from one of our customers. Unfortunately, it’s an all too common situation, so we're sharing our answer here.
Hi Nico,
I’ve been selling vape products online for several years now and we’ve had steady but slow growth, that I’m hoping to speed up. You can imagine that I was super pumped to get some very large orders that would have been a big boost for my company. I have the products in stock, so that's no issue. But, my main concern is making sure these orders are legit. Is there anything I could be doing to validate these before I send them out? I don’t want to lose a great sale, but I also don’t want to lose my shirt in the event they are scams.
Signed,
Optimistic but cautious
Dear Optimistic
It’s exciting to get a large order after you’ve put in so much work in reaching customers You are right, however, to be cautious. Unfortunately, things are not always what they seem.
I’m glad to hear that you are at least prepared to fill the orders. This is something I’ve seen trip up a lot of growing businesses, especially those that are just getting going. They don’t have the inventory, they can’t get things out fast enough, or quite frankly they just don’t have the money in the bank needed to cover a large purchase order.
Here are some questions any business owner should consider: Is my merchant account set up to handle high-ticket sales? Can I cover an order if it turns out to be fraud? Do I have a backup account if something unexpected happens and my processing is put on hold, or worse terminated?
In this case, I’m assuming you’ve planned ahead financially and you’re ready for big orders. So, I get the temptation to fill these. Especially after this past year, it would be great to have that big business bump.
Fortunately, in this situation, you’ve invoked the “It looks too good to be true,” rule. That’s when you ask questions about something that is unusually good. And why not? What’s the worst that can happen? Either you find out it’s a real order that you’ve delayed for a bit or you save yourself a lot of time, money, and aggravation.
Another thing you’ve done right is to have a system set up that can red flag potential problems. A vital part of running an eCommerce business is knowing and understanding your processing baselines. You’ve been watching your numbers so you know what to expect and when something is unusual. Every business faces a fraud risk, and the best thing you can do is be prepared.
Here’s one of the common scams that I suspect you are facing. An individual or a group puts in one big order or a bunch of larger orders. Everything looks fine to the naked eye, therefore your orders are shipped per the normal process. Then you get the dreaded email. You find out they were using a stolen credit card, and you received a chargeback. Not only are you out the money, but you’re out the cost of goods, plus the cost of shipping and any other ancillary fees related to the fulfillment process.
One of the big warning signs, which is what tipped you off, is a sudden increase in the number or size of orders without any apparent cause. If you changed up your ads or put more money into a new marketing campaign, you would expect to see a bump in sales. Same thing if something happened that suddenly sparked interest in your products, like a snowstorm in Texas. Or maybe a TikToker makes a video about your product that goes viral. But if none of that happened, then yes, you should wonder why the sudden interest.
Next, it’s time to peel away the layers of those orders. Here’s an easy thing to check - do the billing and shipping info match? That's not necessarily a problem, but a typical scam involves sending orders to a fake address, so it's worth some follow up. Do a quick internet search of the address on the order to see if the property is up for sale or abandoned. Another thing to check is whether the large quantity orders are going to the same general location, address, or zip codes.
Another red flag is when a credit card is rejected before an order goes through. It doesn’t necessarily mean it’s a bad order. People mistype a number or try to use a card they didn’t know was expired. Not a big deal, but it’s an indication that the deal might be fishy. Especially, if there are multiple attempts to reprocess the sale.
This is something all merchants need to be concerned about. Some scammers will go after items that have a high resell value but others look to buy a large number of lower-value goods.
What you can do is have fraud prevention measures built into your systems and make sure your customer service team knows what to look out for. Many of the products on the market today have the technology built in to automate and do a lot of the leg work on your behalf. Some can even be completely automated, while others give you more control over the ultimate decision-making process.
At the end of the day, when in doubt, it’s always best to look into it further. In this case, as you suspected, the orders may not be legit and therefore we encourage you to dig a little deeper before you commit to processing them.