How to Avoid Fake Orders on

Fake or fraudulent orders can eat into your profits and disrupt operations. A fake order is one placed with no intent to pay – often a prank or a scam to exploit your shipment process. In fact, as one study notes, about 3.6% of online holiday-season transactions in 2023 were suspected fraud. In India especially, the popularity of Cash-on-Delivery (COD) makes stores vulnerable: many criminals place bogus COD orders, knowing they can refuse delivery later. Each fake order costs you shipping fees, inventory, and time. Moreover, handling cancellations and Return-to-Origin (RTO) shipments drives up costs and hurts customer trust.

To protect your business, use a multi-layered approach. Verify customer details, secure payment and shipping steps, and use smart fraud-detection tools. Combine manual checks (email/phone confirmations) with automated safeguards (CAPTCHAs, AI fraud filters). Below are proven strategies, many adapted from e-commerce experts, to minimize fake orders:

Key Strategies to Prevent Fake Orders

• Verify Customer Email and Phone. Fraudsters often use disposable email addresses or incorrect contact info. Send a confirmation email with a verification link and call the customer’s phone number before shipping. If the email bounces or the call fails, cancel the order. For COD orders, require a one-time password (OTP) sent via SMS to confirm intent. These simple checks—echoed by Shiprocket’s advice—filter out prank buyers early.
• Confirm Orders Before Shipping. Always double-check large or unusual orders before fulfillment. For example, a quick follow-up call or email asking “Are you sure you want this order?” can reveal fakes. Shiprocket explicitly recommends canceling any order where the customer doesn’t promptly respond. Likewise, letting buyers cancel or modify orders via a confirmation link or message can prevent accidental or fraudulent purchases. These confirmation steps save the cost of needless shipments and reduce RTO rates.
• Strengthen Payment and Address Verification. Use your payment gateway’s fraud checks. Verify CVV codes and billing info on all card orders. Implement an Address Verification System (AVS) to check that the billing address matches the card issuer’s records. Similarly, use a real-time address-validation API to ensure the shipping address is deliverable. These layers catch stolen-card purchases and prank shipments. As Cybez recommends, pairing AVS with 3D Secure (two-factor authentication for cards) adds extra protection. Also watch for inconsistencies – if the shipping name/address doesn’t match the customer’s account, flag it for review.
• Use CAPTCHA and Bot Protection. Many fake orders are placed by bots or scripts. Add a CAPTCHA challenge on signup, login, and checkout forms to ensure a human is behind each order. Google’s reCAPTCHA, for example, can silently block bots while only slightly inconveniencing real buyers. You can also insert a hidden “honeypot” field in your forms: bots will fill it out and instantly reveal themselves. Blocking suspicious IP addresses or regions is another effective layer.
• Implement Fraud Detection Software. Take advantage of automated fraud-scoring tools and machine learning. Platforms like Sift, Kount or FraudLabs (and even Shopify’s own built-in risk analysis) assign a fraud risk score to each order based on dozens of signals (IP reputation, order velocity, previous behaviors, etc.). Orders flagged as high-risk can be auto-canceled or held for manual review. According to Cybez, good fraud software “uses advanced algorithms and machine learning to continuously improve” at spotting fakes. This is especially important as your store grows – manual checks alone won’t scale.
• Set Order Limits and Restrictions. Prevent bursts of fake orders by capping new or suspicious accounts. For example, limit the number or total value of orders a customer can place in a short time, or flag first-time buyers for extra checks. Consider restricting high-risk COD orders (for example, very expensive items) or requiring partial payment (a small token or deposit) on COD. Geographical limits can help too – if certain areas give you many fakes, require extra verification there. These smart restrictions reduce the impact of any remaining fraud attempts.
• Require Payment Before Shipment. Whenever possible, move away from COD. Requiring online payment up front virtually eliminates the incentive to scam you, since fraudsters have to part with money upfront. If you must offer COD, make it truly “last resort” by adding a verification call or OTP for those orders. Even collecting a small pre-authorization (like holding the card amount or charging a token fee) ensures the buyer is committed. In short, “moving toward pre-payment ensures that only committed customers place orders”.
• Monitor and Analyze Order Patterns. Keep an eye on unusual buying behavior. For example, a single user placing many small orders in quick succession, or multiple orders shipping to the same address with different names, are red flags. Advanced stores use real-time analytics and machine learning to spot such anomalies as they happen. If you see erratic patterns (like bot-like checkout speed or repeated use of the same credit card on different accounts), cancel or pause those orders immediately. Over time, learning from these patterns helps refine your filters.
• Educate Your Team and Customers. Ensure staff know common fraud signs (strange addresses, mismatched info, etc.) and how to respond. Train customer service to handle suspicious orders tactfully and to escalate when needed. Transparency also builds trust: letting customers know you verify orders (without revealing security details) can deter would-be scammers. For example, if a customer sees “OTP will be sent for COD orders” on the checkout page, it signals security measures are in place. According to Cybez, educating your team and even customers helps “prevent fake orders” by making fraud checks an expected part of the process.
• Leverage AI-Driven Shipping Platforms (e.g. OrderzUp). Finally, consider a modern shipping/fulfillment platform that has fraud prevention built in. OrderzUp, for example, uses AI-powered address validation and phone verification to automatically flag risky orders. Its predictive fraud-detection engine “blocks risky and duplicate orders automatically” before they ship. In practice, this means orders with mismatched info or known bad patterns are filtered out without manual intervention. OrderzUp also optimizes carrier selection and provides real-time tracking, cutting Return-to-Origin (RTO) losses by up to 30% according to their claims. Integrating a smart platform like this gives you an extra layer: even if a fraudulent order slips past your checks, OrderzUp’s system can catch it before your courier arrives.

Conclusion

Fake orders are a persistent challenge for any e-commerce seller, but they can be managed with diligence and the right tools. By verifying customer details (email, phone, payment), using CAPTCHAs and fraud-scoring tools, and setting sensible order limits, you make it much harder for scammers to succeed. Additionally, shifting towards prepaid orders and training your team fortify your defenses.

For comprehensive protection, combining these best practices with an AI-driven solution is ideal. Platforms like OrderzUp automate address/phone validation and fraud detection, catching suspicious orders automatically. Together with an attentive team, OrderzUp can help you minimize fake orders and the associated RTO costs. Implement these strategies, and your store will be far safer from pranksters and fraud – keeping your revenue and customer trust intact.

Sources: Advice and data from e-commerce security experts and platforms. Each source covers real tactics used in the industry to combat fake orders and protect online sellers’ profits.