Shopify is an incredibly popular eCommerce platform that currently powers 4,418,121 live websites. And it’s no wonder why – Shopify is easy to use, has plenty of features and integrations, and is relatively inexpensive.

Shopify’s impact on the global economy has been phenomenal too — it has contributed $319 billion in global economic activity.

However, as with any popular platform, Shopify is not without its faults. One of the biggest problems facing Shopify merchants is fraud, and this poses a risk that one cannot overlook.

In this article, we talk about 4 reasons why you need to manage risks for your Shopify business.

But before let’s understand the types of fraud and a sure-shot method to manage them.

Problem — Shopify merchants face frauds 

While there is no lack of frauds faced by merchants today, some popular ones are:


  • Fake orders: A fake order is when a fraudster places an order on your Shopify store using a stolen or fake credit card. The fraudster will usually choose high-priced items and have them shipped to an address that’s different from the billing address. This type of fraud is also known as “card-not-present” fraud.
  • Chargebacks: A chargeback is when a customer disputes a charge on their credit card statement. This can happen for a number of reasons, but it’s often because the customer never received the product they ordered, the product was not as described, or the customer was the victim of fraud. Chargebacks are costly and time-consuming to deal with, so it’s important to do everything you can to prevent them.
  • Counterfeit products: Counterfeit products are fake products that are made to look like the real thing. These products are often of poor quality and can damage your brand reputation.


The List goes on!


Solution — invest in reliable apps

Today, there is software or an application for almost every need. Be it creatives for social media or a payment merchant to streamline the payments.

But coming to fraud, you need to be meticulous when it comes to finding apps to prevent shopify fraud that actually use the latest technology to detect fraud before it puts a business in danger. Fraud is a crime that can have serious consequences for both the victim and the perpetrator. Preventing fraud helps to protect people and businesses from losses due to fraudulent activity.

Good fraud detection apps today use machine learning and advanced data analytics to identify patterns in fraudulent behavior. Machine learning can identify fraudsters even when they are using new methods or data, so you can stay one step ahead of the fraudsters.

Some qualities of a good fraud detection app for ecommerce may include the ability to monitor customer behavior, set thresholds for suspicious activity, and flag or block suspicious transactions.  Another example is the ability to track customer behavior and activity, including IP addresses, device IDs, geolocation, and other data points.

Other features may include robust customer support, regular updates, as well as training and educational material to help merchants understand fraud in the eCommerce space better.


4 reasons to manage risks for your Shopify Business

As an Ecommerce merchant, you are aware of potential risks to the business. But there is still a lack of information regarding how these frauds play out in the real world.

In this section we take a deep-dive into some of the risks that a Shopify business is exposed to, and how it can derail business operations if proper fraud-prevention measures are not deployed on time.




In general, account takeover fraud occurs when a criminal uses personal information to gain access to and assume control of another person’s online account.

This can happen when a criminal obtains login credentials through phishing or other means, or when they use stolen identity information to open a new account in someone else’s name.

Once the criminal has taken over the account, they can use it to commit a variety of fraudulent activities. For example, making unauthorized purchases, transferring money to their own account, or even using the account to commit identity theft against the account holder.

As per SEON’s guide on the statistics of account takeover fraud, “Account takeover attacks are on the rise, with an estimated 22% of adults in the US falling victim to this type of fraud, and average losses of around $12,000 per case. It is essential now more than ever not just for private individuals but also businesses to put in place defenses against online fraud.”




Ecommerce merchants need to be aware of the potential for money laundering and take steps to prevent it. One way to do this is to monitor transactions for suspicious activity.

This can include looking for patterns of behavior that may indicate money laundering, such as repeated transactions of small amounts of money, or transactions that are not related to the business.

Ecommerce merchants should also be aware of the signs of money laundering, such as customer complaints of being asked to purchase goods or services for someone else, or requests for refunds for products that were never received.

Additionally, there are a few types of eCommerce frauds that could lead to identity theft, such as account takeover (as discussed above) and carding. In both cases, criminals gain access to victims’ personal information and use it to make unauthorized purchases or withdraw money from their accounts.

Transaction monitoring can help prevent identity theft by flagging unusual activity, such as large purchases made with stolen credit card numbers. Using a fraud prevention app created for Shopify can help identify this on time so that you can manage any potential risk at the earliest.




Return fraud is a type of eCommerce fraud in which criminals return stolen or counterfeit merchandise to a store or eCommerce site in order to receive a refund. This type of fraud can be difficult to detect, as it often takes place after the transaction has already been completed. Common examples of refund fraud are:

  • Receipt fraud is a type of eCommerce fraud in which criminals create fake receipts in order to return merchandise for a refund. This type of fraud can be difficult to detect, as the criminals often use real receipt paper and real store logos.
  • Price arbitrage is the practice of buying a product from one online retailer and selling it to another online retailer for a higher price. This type of arbitrage is possible because prices for identical products can vary widely between different online retailers.
  • Switch fraud is a type of eCommerce fraud in which criminals use stolen credit card information to make purchases, and then return the merchandise to the store or eCommerce site using a different credit card. This type of fraud can be difficult to detect, as it often takes place after the transaction has already been completed.
  • Wardrobing is a type of ecommerce fraud in which criminals purchase high-priced items with stolen credit cards, and then return the items for a refund before the card issuer realizes the purchase was fraudulent. This type of fraud can be difficult to detect, as it often uses legitimate credit card numbers and billing addresses.



Triangulation fraud is a type of e-commerce fraud in which a fraudster uses a third party to help commit the fraud. The fraudster will set up two fake accounts, one with a merchant and one with a payment processor. They will then use the payment processor account to pay for goods or services from the merchant account. This type of fraud is especially difficult to detect and prevent because it uses legitimate accounts and businesses to commit the fraud.

Signs that direct toward this type of fraud are: new accounts buying the same items on a regular basis, invalid contact details, sudden increase in transactions, a large number of transactions going to the same payment processor, discrepancies between Shipping and Billing Addresses.



There are many reasons to protect your eCommerce business from fraud. One reason is to protect your business reputation.

If your business is known for being easy to defraud, you may have difficulty retaining customers and attracting new ones.


Additionally, fraud can lead to financial losses for your business. By taking steps to protect your business from fraud, you can help reduce these losses.

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