· 14 min read

How to Deal with High-Risk Orders on Shopify

Running an online store on Shopify is both rewarding and challenging.

One common challenge is dealing with high-risk orders, which come with an elevated risk of fraud or chargebacks.

In this guide, we'll help you understand high-risk orders, identify them, and provide strategies for effective handling.

What is High-Risk Orders on Shopify?

High-Risk Orders on Shopify are essentially orders that the Shopify platform flags as potentially fraudulent or risky.

This is a crucial aspect of Shopify's fraud prevention system, designed to protect both the store owner and the customers.

Shopify spots these to protect you from losing money and to keep your shop's reputation safe from these dishonest transactions.

Note that: not all high-risk orders are fraudulent. Some of these orders could be from genuine customers. However, it's always better to be safe than sorry. :)

How Does Shopify Fraud Prevention Identify High-Risk Orders?

Shopify uses advanced algorithms and machine learning to analyze each order.

It looks for signs of fraud, such as:

  • A mismatch between the customer’s billing and shipping addresses.
  • Orders made in quick succession that seem out of the ordinary.
  • Large purchases made by a new customer.
  • Multiple failed payment attempts before a successful transaction.

These indicators help Shopify determine if an order is regular or potentially risky.

What Happens When an Order is Flagged as High-Risk?

When an order is flagged, the store owner gets a notification. This doesn’t automatically mean the order is fraudulent, but it’s a warning to take a closer look.

Store owners can then review the order and decide whether to fulfill it, cancel it, or take additional steps to verify the order's authenticity.

Here's what happens when multiple orders are marked as high-risk orders:

  • Financial Loss: High-risk orders pose a significant financial risk due to chargeback fraud.
  • Reputational Damage: Dealing with high-risk orders can harm your business's reputation.
  • Negative Reviews: This frustration can lead to negative reviews from customers, impacting your online reputation.
  • Decreased Customer Trust: Negative experiences with high-risk order cancellations can shake customer trust.
  • High-Risk Merchant Label: Frequent chargebacks can lead payment providers to label you as a high-risk merchant.

Therefore, handling high-risk orders proactively and effectively is crucial to safeguarding your store's future.

How to Deal with High-Risk Orders in 5 Way

When it comes to handling high-risk orders on Shopify, a balanced approach is key.

You don't want just to cancel every order that seems a bit risky, because you might lose good sales and upset your customers.

Instead, consider taking additional steps and measures to verify the order's legitimacy.

Here are the methods to manage these orders effectively:

1. Shopify’s Fraud Analysis

It is available for stores that use Shopify Payments and most third-party payment processors and is included in the Shopify, Advanced Shopify, or Shopify Plus plan.

Shopify's Fraud Analysis is a built-in feature of Shopify that helps online stores figure out if orders are likely to be scams or not.

Here is how to check for fraud analysis on an order in your Shopify store, using your desktop:

1. In your Shopify admin, visit 'Orders'.

2. Look for orders marked with an exclamation mark - these need closer attention.

3. Click on the order. You'll find 'Fraud analysis' on the order page. A basic Shopify plan or higher shows detailed indicators.

4. If you use fraud detection apps, their insights and recommendations appear below.

Note: You can ensure the security of transactions in your store by enabling the following two features:

  • AVS (Address Verification System): It's like a friendly guard, ensuring the billing address matches the card's address.
  • CVV (Card Verification Value): This double-checks the security code on the back of the card.

Key indicators you should pay attention to in your Shopify store:

shopify high risk orders indicators

2. Shopify Protect with Shop Pay

Shopify built in feature Shopify Protect with Shop Pay

Shopify Protect is a valuable built-in feature that boosts the security of your Shopify store, especially in terms of chargeback protection.

To protect an order with Shopify Protect, you need to follow these steps:

1. Ensure Shop Pay is active in your store.

2. In your Shopify admin, click 'Orders' to access your order list.

3. Choose the specific order you want to protect.

4. If you're using Shopify Shipping, click 'Create shipping label.' If not, use 'Fulfill item(s)' and add the tracking number. You can also create a shipping label without an order.

5. Click 'Fulfill item(s).' If you use Shopify Shipping, you must select a shipping service and purchase the shipping label.

Understanding the status of an order is crucial, here are the possible order statuses:

  • Shopify Protect: This status indicates that you can protect the order by fulfilling it within 7 days, adding tracking information, and handing it over to the carrier within 10 days.
  • Protected by Shopify Protect: This status appears when the order was already protected and there's a chargeback issue.
  • Not protected by Shopify Protect: This status is seen when the order wasn't fulfilled within the specified timeframe or had a chargeback unrelated to fraud.

3. Shopify Flow

Shopify Flow which is Shopify built in feature for fraud protection

Available for shops on Shopify, Advanced Shopify, or Shopify Plus plan, and shops using Shopify Fulfillment Network (SFN).

Shopify Flow is a great built-in feature that empowers you to automate your order management.

With Shopify Flow, you can set up triggers that automatically flag orders.

To create a new workflow in Shopify Flow, follow these steps:

1. Log in to your Shopify admin dashboard.

2. From the left-hand sidebar, click on "Apps."

3. In the Apps menu, scroll down and click on "Shopify Flow."

4. Inside the Shopify Flow app, you should find options to create a new workflow or automation.

Tip: Identify your specific needs and goals when creating a workflow. Consider what triggers are most relevant to your business, such as order amounts, customer tags, or product categories.

4. Customer Blacklists

Shopify lets you label people who have done risky or fraudulent activities in the past.

These labels help you keep them from buying things from your store again.

If you want to learn more about how these labels work in Shopify, you can read this blog: "What are Tags on Shopify?"

Here are the quick steps for Shopify customer blacklist:

1. Go to your Shopify dashboard.

2. In 'Customers', tag risky individuals as “Blacklist”.

Shopify blacklist feature for prevent fraud order

3. Set up manual or automated reviews for orders from blacklisted customers.

4. Keep the blacklist current, adding or removing customers as needed.

5. Third-Party Apps for Handle High-Risk Orders

A good way to deal with high-risk orders is to use third-party apps with extra features to make your store more secure.

We'll now talk about three popular choices and how they can help protect your business from fake orders.

1. NoFraud Fraud Protection

NoFarud Fraud app on app store view

This app provides a fully automated system for preventing fraudulent orders in your online store.

It's managed by experts specializing in spotting and stopping fraud.

Here's what makes it stand out:

  • Chargeback Protection: Helps protect against chargebacks and refunds requested by customers who claim they did not authorize a purchase.
  • Flexible Order Browsing: You can adjust how the app displays orders.
  • Customized Review Process: The app allows you to customize how you want your orders to be reviewed.
  • Cancellation of Fake Orders: One of the most important features is the ability to detect and cancel fraudulent orders before they are processed quickly.
  • Detailed Reporting: The app provides comprehensive reports on the status of your orders and any fraud attempts.

2. ClearSale Fraud Protection

third party app Clearsale for fraud protection app store view

ClearSale is a tool that helps protect your online store from fake orders and unnecessary refunds.

Here’s what makes it suitable:

  • Stops Fraud: It’s good at catching scammy orders, so you don't lose money.
  • People Check Suspicious Orders: If an order looks unusual, expert people (not just computers) check it out to ensure it’s okay.
  • Different Pricing Options: You can pick a pricing plan that fits your store's size, so you're not paying too much.
  • Customized for Your Store: They make their service fit your specific needs, which can help your store do better.
  • Always Improving: They keep updating their system to fight off new kinds of scams.

3. Signifyd‑Chargeback Protection

third party app Signifyd for risk managemet app store view

Signify is designed to help online stores automatically check orders and protect against fraud and abuse.

Here's what it does well:

  • Automates Order Review: Uses smart technology to quickly review orders, saving time and reducing the risk of fraudulent transactions.
  • Uses Machine Learning: This means it gets smarter over time when detecting fraud.
  • Expert Manual Review Automation: If something needs closer inspection, it has a system to handle those reviews efficiently.
  • Financial Guarantee Against Fraud: If fraud occurs on a confirmed order, they have you covered.
  • Automatic Chargeback Recovery: It also helps you handle chargebacks automatically.

To Sum Up

Dealing with high-risk orders on your Shopify store requires a careful strategy.

It's like finding the right balance between protecting your business from fraud and chargebacks while making sure your customers have a good experience.

In this guide, we've covered the important aspects of handling high-risk orders.

By using these tools and strategies together, you can strike the right balance between preventing fraud and keeping your customers happy.

Frequently Asked Questions

Can I Still Accept a High-Risk Order?

Yes, you can accept a high-risk order, but it's essential to conduct a detailed risk assessment.

Consider factors such as the nature of the risk, the customer's history, financial impact, legal compliance, and potential safeguards.

Consult with advisors if needed, and ensure your contract includes protective terms.

Having a plan for possible negative outcomes is also wise.

Note that, while high-risk orders can bring rewards, a careful approach is key to managing potential challenges effectively.

What Happens If I Receive Too Many Chargebacks on My Shopify Store?

If you receive too many chargebacks on your Shopify store, you may face:

  • Increased Costs
  • Financial Losses
  • Risk of Account Termination
  • Reputation Damage
  • Impact on Future Payments

To avoid these consequences, it is very important to implement effective fraud prevention measures and increase customer loyalty by providing excellent customer service.

Can I Automatically Reject High-Risk Orders?

Yes, you can set up automated rules to decline or put high-risk orders on hold.

However, balancing fraud prevention with not blocking genuine orders is essential. To implement these rules:

  • Access your Shopify admin panel and navigate to "Settings."
  • Choose "Payment providers" from the menu.
  • Scroll down to locate the section related to your selected payment provider, whether it's Shopify Payments or a third-party service.
  • Seek out the settings related to "Order Risk Level" or "Fraud Detection."
  • Adjust the settings to specify which orders should be automatically declined or held for review based on specific risk criteria.

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