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High Risk Countries for Online Fraud

Online frauds are common, whether it be a few dollars charged at an online store you’d never shop at or a thousand-dollar con. There is an instance of online fraud every two seconds in America alone, and this type of identity fraud is a major concern across the world — especially for those running an online business.

A research report from Sift Science has found that online fraud happens on almost every continent. Here are the top 10 countries that have the highest rates of online fraud.

  1. Latvia
  2. Egypt
  3. United States
  4. Mexico
  5. Ukraine
  6. Hungary
  7. Malaysia
  8. Colombia
  9. Romania
  10. Philippines

Some markets and regions are more susceptible to online fraud than others because of differing levels of online security, an ability to access illegal credit card information easily, or a lack of awareness about the impact of online fraud.

Flagging these countries as high-risk is the first step to eliminating online fraud.

For example, Control offers real-time sale alerts that include fraud preventative push notifications. This enables users to personalize and tag incoming sales from specific countries — like Nigeria, Latvia, or Egypt — as high risk. Once tagged, you can investigate to see whether the transaction is fraudulent or not.

Stripe and PayPal help prevent online fraud

Stripe uses an inbuilt prevention toolkit called Radar. Businesses can implement different rules and regulations using this system to help prevent online fraud — for example, blocking suspect IP addresses from making payments or restricting payments from certain countries.

Similarly, PayPal also offers Fraud Protection Services for their users. This service includes a high payment filter to catch rapid repeat buying, rejections lists to shun out repeat offenders, and support identifying “risky international payments”.

When online fraud happens

One of the most common ways a business can spot whether they’ve been a subject of online fraud is when they incur a chargeback from a bank. This is a tell-tale sign that online fraud has occurred and can be incredibly costly for a business due to not only refunding the customer but also incurring chargeback fees.

Of course, not all chargebacks are fraud — some may be legitimate mistakes on the merchant’s part, such as double charge. Make sure you find an acceptable balance between investigating what is a genuine customer chargeback and what is online fraud.

With that being said, Stripe and PayPal, in order to protect their operation will freeze your account and your funds if you accumulate a high chargeback rate.

This previous blog post will give you insight into preventing chargebacks before they occur.

How does online fraud happen?

Online fraud occurs when an illegitimate transaction happens online. For example, a customer purchases $400 worth of clothes from a reputable online store using stolen credit card information.

Online fraud comes in many forms. If you’ve obtained information through these methods, the FBI will consider you to be committing online fraud:


Aptly titled because fraudsters “fish” for information by sending an email or text message pretending to be a legitimate company or imitating an established business such as a bank or government website. The idea is to get the recipient to share personal information such as credit card numbers, bank account information, and passwords that fraudsters can then use online.


Malicious software (malware) is installed on a business’s network and quickly encrypts files that contain sensitive information such as credit card or bank details. The fraudster who installed the malware then demands a ransom be paid in order for the business to regain access to those files. In the meanwhile, the fraudster can either use or sell this information.

Email Compromise

Fraudsters use compromised emails to request payments to fraudulent locations. This method usually targets business owners, legal workers, and financial institutions.

Once information has been gathered, online fraud occurs in one of three ways: payment fraud, new account fraud, or account takeover.

  • Payment fraud occurs when stolen credit or debit card information is used to make purchases.
  • New account fraud happens when perpetrators create new bank accounts for illegal reasons (i.e. money laundering).
  • Account takeover is when a fraudster uses someone else’s bank account to conduct illegal activities (i.e. purchase items online or sign up to credit cards).

Further reading: Uncovering All the Hidden Fees of PayPal

How to stop online fraud

Knowing the tell-tale signs of online fraud can help businesses become more aware of when fraud may occur and ultimately save themselves money in the long run.

Billing & Shipping

If the billing and shipping address are different, this may be an alarm bell for online fraud — especially if a large or expedited order has been placed. Confirm suspect orders with a telephone call or email. Use your best judgment as there may be occurrences whereby the order is simply a gift.


CVV (card verification value) is the three- or four-digit number that is only ever printed on the back of a credit card, according to Practical Commerce. Merchants should flag up instances where the CVV is inputted correctly. This is a warning that a customer may have electronic credit card information and not access to a physical credit card that contains the CVV.

IP Address

Check that the IP address matches the credit card being used for purchasing. For example, the credit card may be registered to an address in England but the IP shows a purchase location of Latvia. You can look up IP addresses using Whats My IP if you suspect that a credit card is being used fraudulently.

Tracking and Signatures

Require signatures for expensive items and ensure you have package tracking enabled for shipments. This can prove worthy when justifying “missing” or “undelivered” packages, especially if an online fraud case goes to court.

Fraud prevention should be an ongoing strategy for any online business. As Stripe put it “what works one year — or even during one season — may not work the next”. Develop a strong loss prevention stance and educate your employees on what the acceptable levels of online fraud are for your business.

Control offers sales management and fraud prevention tools for business managers on the go. Download the iOS and Android app today.