Anti Fraud Strategies for Online Retailers: Dealing with Corporate Addresses

Corporate addresses present both a challenge and an opportunity when evaluating fraud. Most online retailers flag transactions when the shipping and billing addresses differ. Many consumers ship their purchases to their business addresses for convenience. It is in generally more secure and it is likely there will be someone to receive the package. The trouble is that in most cases it is different from the consumer’s billing address, thus causing most online retailers to flag these transactions in their anti fraud process.

Flagging transactions where the shipping and billing address mismatch is too wide of a net… meaning it is noisy, while most fraudulent transactions do have a different billing and shipping addresses, it is also true that many many more good transactions also have a different billing and shipping. So while it is a good indicator it can’t be taken in isolation. 

The Challenges
Simple fraud filters like what you find in most of Payment Gateways don’t allow merchants enough granularity to separate the billing/shipping mismatch risky, vs the safe ones. Leaving merchants with a false sense of security and likely a higher set of rejected transactions.

More sophisticated merchants using identity verification services, those that are based on public records, and that can associate users with addresses, likely won’t help either, as there isn’t a public record relationship between the user’s name and the corporate address.

Looking at the address and saying “it is corporate” is not going to solve your problems though. Firstly, sometimes identifying an address as corporate isn’t trivial. There is not a database that says “address such and such belongs to company X”. The smaller the company the harder it is identifying it as a corporate address. Secondly, corporate addresses are also a good destination for fraudsters to ship to and pick up without ever being linked to the order. 

The Opportunity
While there are clear challenges with the corporate addresses, there are also key opportunities to quickly accept good transactions with very little risk of fraud. In our experience there are three key positive uses:
  1. When it matches the consumer’s email domain address
  2. When the phone number matches the company associated with the address.
  3. When the IP address is also registered to other consumers that either share the same email domain address or the first phone digits.
A key benefit of these anti fraud techniques is that the chances of a corporate address ever being associated with fraud are very small after you’ve verified them as good.

In IdentityMind’s platform we can identify when addresses are corporate addresses. Fraud analysts can add filters in the fraud rules that allow them to automatically accept transactions that otherwise would have been flagged for manual review.  Having these rules in place will increase merchant’s overall revenue, while decreasing the manual review costs and false positives.


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