How to Prevent and Protect Yourself from Online Fraud

If you've ever been victim of fraud before, then you know all too well how ugly it can be. The key to preventing fraud is to use common sense and investigate with all the information you've.

Preventing Fraud

They key to preventing fraud is to collect as much information as possible. While more information is generally better, there is such thing as too much information too. You don’t want to go around collecting your clients’. SSNs, as that probably would scare them away. A shopping cart. Some sort of ordering system is usually a good idea in keeping your customer data secure and easily findable.

Below we’re going to break up the different techniques you can do with certain types of information.

IP Address

The best thing you can do with an IP address is figuring out the location of it. You can do this with or Sometimes an IP can be off by a few states or a few hundred miles at the most. But if the IP location is in a different country than your customer, then you may have a problem. From my experience, the IP is usually from an odd country. Generally IP is one of the most clear indicators. It can be wrong.

Phone Number

With a phone number, you can do several things. The most obvious is figure out where the area code is. If this is a US phone number, you should be able just Google the area code and it'll tell you the location of it. Be forewarned, that a lot of times people have an area code near them. Not necessarily in the same location. Then there are the oddballs who have a VoIP number or something similar on the other side of the country. You got to be very careful with phone numbers.

The next thing you can do is a reverse phone lookup. I find to be the most effective and easiest to use. A lot of numbers that you'll lookup will be unlisted or cell phone numbers. A reverse phone lookup is also an effective method for finding out if your customer is a minor or just slightly older than a minor (as always, there are exceptions to this).


Every domain must've contact information. There are services out there that offer privacy protection for their contact information. A lot of the domains are unprotected. You can lookup your client’s domain using DomainTools to see if it’s registered to them. If it's, compare the information there with the information that they gave you.

Username / email

Almost all of the fraudsters that you'll encounter will use a form of a free email address. The tricky part is. Will your legitimate customers. Googling their email address or a username will sometimes return some results that you can checkout. Learn more about your customer to see if he'll be the ideal customer.

How to Deal with an Existing Fraud Case

Didn’t see this tutorial in time to learn how to prevent fraud? Well, let’s go over the basics on fighting those pesky chargebacks.

No matter what type of merchant account you own, if it's a legitimate fraud, then you'll lose. It’s pretty simple. However you do stand a chance against those who cry fraud, when in reality, they just wanted it free.

If you use Paypal, then you do stand a chance. If you sell a non-tangible service, such as software. Programming/designing etc. then tell Paypal this. Provide proof that you did fraud screening. That you know this person received what you guaranteed to them. If they’ve paid through a credit card to Paypal, then your chances become increasingly smaller. Almost every dispute a consumer files with their credit card company, they'll reward the consumer. Fighting a credit card chargeback isn't an easy task at all.

The bottom line is use common sense. Try to call your customers directly if possible, to speak with them over the phone. This is by far the best method of preventing fraud. But just remember, there isn't a single method that'll reduce fraud by 100%. You should always be aware of that, each and every day.