WooCommerce is a trusted, secure tool that’s regularly updated and maintained specifically to protect online stores against malicious attacks and hacking. However, like any platform, it’s not immune to security threats like order fraud.

Fortunately, there are steps you can take to minimize WooCommerce order fraud. This will not only protect your profits but also safeguard your brand’s reputation and provide a more secure shopping environment for your customers.

In this post, we’ll cover the essentials of ecommerce fraud, including how it’s done and why it’s on the rise. We’ll also look at how fraudulent activity can impact store owners and share some measures to help you prevent it.

Types of WooCommerce Fraud

The number of online shoppers is projected to exceed three billion by 2029. This surge is great for merchants, but creates more opportunities for fraudsters. Juniper Research predicts that losses from online payment fraud will exceed 343 billion U.S. dollars between 2023 and 2027, as bad actors find more sophisticated ways to harm online businesses. 

More and more frequently, cybercriminals are using advanced AI bots and phishing schemes that perfectly impersonate legitimate individuals or organizations. Many online stores lack robust security systems to combat these attacks, making them easy targets.

The same Juniper Research study shows that the largest fraud risk is an inadequate address verification process, with criminals targeting physical goods they can easily resell for profit.

Let’s take a closer look at the most common types of fraud in the ecommerce industry.

Using Stolen Credit Cards

Fraudsters can use stolen credit card information to make unauthorized purchases. They don’t need access to your customers’ accounts for these transactions — they can use data they stole from other online stores or shadow markets.

When a stolen card is used, the legitimate cardholder might notice the unauthorized transaction and report it to their bank. This will likely result in a chargeback, and you might incur additional fees imposed by payment processors and banks.

Plus, multiple instances of chargebacks can damage your store’s relationship with payment processors and lead to account suspension.

Card Testing or Carding Attacks

Card testing is when people use an online store to test the validity of stolen card details.

Typically, they make several small transactions so they won’t draw attention. Once they confirm a card is active, they move on to larger purchases or sell the details on the dark web.

Some fraudsters use automated bots to test multiple cards on your store at the same time. This can overwhelm your server and slow down your site’s performance, negatively affecting the shopping experience for legitimate customers.

Creating Fake Accounts

Another common tactic is creating fake customer accounts, which allows someone to bypass security measures and carry out malicious activities while masking their identities.

They may even create multiple fake accounts to exploit first-time buyer discounts, referral programs, or promotional coupons. This can lead to substantial revenue loss for your store.

Submitting Fraudulent Orders

Submitting fraudulent orders is one of the most direct ways bad actors can exploit WooCommerce stores. These often involve stolen payment information, fabricated identities, or manipulated shipping details.

The goal is often monetary theft, although cybercriminals may also test system vulnerabilities to perform fraud on a larger scale.

Exposing Vulnerabilities

Hackers can also exploit weaknesses on your site to carry out WooCommerce order fraud. Your store is especially at risk if it contains outdated software or third-party integrations, like payment gateways, that are not secure.

These vulnerabilities enable cybercriminals to bypass traditional fraud prevention measures and carry out malicious activities.

The Impact of Fraudulent Activity

Ecommerce fraud can have severe consequences for online stores. Let’s explore a few of the potential ramifications.

Financial Losses

Fraudulent transactions can result in:

• Refunds: Fraudulent purchases often lead to returns and refunds.
• Chargebacks: When customers dispute charges and request refunds, your store incurs costs associated with processing these disputes.
• Lost revenue: Fraudsters may place large orders with stolen credit cards, receive the goods, and then vanish without payment.

Note: High chargeback rates can lead to penalties from payment processors, which will further drain your bank account.

Increased Operational Costs

Fraud can also contribute to increased operational expenses. You’ll need to investigate fraudulent transactions and their sources, which can be time-consuming and labor-intensive.

You might have to hire a cybersecurity expert to help you find a resolution, and expand your customer support team to handle inquiries from affected customers. All of this is costly.

Increased Risk of Account Suspension

Payment processors and card networks like Visa and Mastercard impose chargeback thresholds to minimize financial risks. Exceeding these limits can lead to account suspension.

These thresholds are calculated using the chargeback-to-transaction ratio. The number of chargebacks a merchant receives is divided by the number of total transactions.

The chargeback ratio should be below 0.9%. Higher ratios can lead to penalties, account termination, and even blocklisting.

Reputational Damage

Fraudulent transactions may lead customers to question the security of your store. If their personal or payment information is compromised, they may feel unsafe and hesitant to shop with you again.

This will erode customer trust and loyalty, and will even harm your brand reputation, especially if news of these fraud incidents spreads online. It can be difficult to repair your business image and win back lost customers, even if you take steps to prevent fraudulent activities in the future.

Potential Legal Repercussions

Fraudulent activity on your WooCommerce store doesn’t just threaten your finances and reputation; it can also expose your business to legal liabilities.

As you may already know, data privacy laws — like the General Data Protection Regulation (GDPR) in the European Union and the California Consumer Privacy Act (CCPA) in the United States — have strict requirements on how businesses collect, store, and protect customer data.

If a fraudster gains access to this data due to negligence on your end, it can lead to hefty fines for failing to protect user data.

There’s also the PCI Data Security Standards (PCI DSS), which outline best practices for protecting payment card information. If fraud occurs because your store is not PCI-compliant, you may face penalties from payment processors or legal action from affected parties.

Resource Spikes

Fraudsters often use automated tools to flood a store with fake orders. As mentioned earlier, they may do this to test stolen credit card details (card testing).

Each order submission consumes server resources. When these occur in large volumes, they can strain your website’s hosting infrastructure.

A sudden influx of fraudulent orders can therefore break your website or take it offline. This will result in lost sales, as legitimate shoppers will be unable to access your products.

How to Prevent Fraud in Your WooCommerce Store

Preventing fraud requires a multi-layered approach. Here are some effective strategies that you’ll want to implement:

1. Keep Software Up to Date

Regularly update WordPress core, themes, and plugins to patch vulnerabilities and ensure compatibility with the latest security standards.

Outdated software is a common entry point for hackers. When plugins and themes on your website are not updated, they may lack critical security patches.

Hackers actively search for outdated software on websites to exploit known weaknesses. For instance, they can use automated tools to scan for sites that use older versions of WooCommerce.

When possible, you’ll want to enable automatic updates for plugins and themes within your WordPress dashboard. It’s also important to regularly check your admin area to make sure that you haven’t missed any updates.

2. Require Strong Passwords

Weak passwords provide an easy way for bad actors to gain access to customer accounts and use their data for fraudulent transactions.

Encourage customers to use strong, unique passwords for their accounts. These should contain a mix of uppercase and lowercase letters, numbers, and special characters.

Some WordPress plugins enable you to create a password policy for your store and further boost security with two-factor authentication (2FA). This means that shoppers will also need to confirm their identity with a code or a mobile app like Authy or Google Authenticator.

With strong passwords and 2FA, it’s significantly more difficult for fraudsters to get into your customers’ accounts and steal their data for fake orders.

3. Use a Quality Payment Gateway

Payment gateways like WooPayments, Stripe, and Square offer advanced fraud detection features. Some features will be enabled via WordPress and others via the payment gateway’s account settings.

WooPayments, for example, includes tools to identify and block fraudulent transactions. It also enables you to configure fraud protection rules for your store. Every new order is evaluated against these rules before it’s allowed or blocked.

In your WordPress dashboard, go to Payments → Settings and navigate to the Fraud Protection section. Here, select the Advancedrisk level.

You can then set additional rules for your orders. For example, you might choose to block an order if the billing and shipping countries do not match and the customer’s IP address is based outside of the countries you sell to.

If you’re using Stripe, you’ll benefit from a machine-learning fraud prevention solution called Radar. This is available to all accounts and is trained on billions of data points from across the world.

When a visitor tries to make a purchase, it’s very likely that Stripe is already familiar with their credit card and will stop the payment if it was previously used for fraudulent transactions.

Similarly, Square uses machine learning to detect and block online payment fraud. It also has a system called 3D Secure, which authenticates payments and shifts the responsibility for fraud disputes from your business to the card issuer, at no additional cost to you.

4. Implement an Address Verification System (AVS)

An AVS checks that the billing address provided by the customer matches the address associated with the credit card.

Fraudsters often use stolen cards without knowing the associated billing address. An AVS checks that the billing address provided by the shopper matches the address for the credit card. If it doesn’t, it will block the transaction.

If you’re using WooPayments, you can enable AVS from the fraud detection section mentioned in step three.

5. Enable CVV Checks

Requiring customers to enter the card verification value (CVV) code adds an extra layer of security to credit card transactions.

CVV codes are printed on physical cards. Typically, they’re three or four digits at the back of a card.

Secure payment gateways do not store CVV codes in their databases once a transaction is complete. Also, the PCI DSS strictly prohibits merchants from storing CVV codes after a transaction is authorized.

This makes it difficult for fraudsters to get hold of this data. If you have CVV enabled on your site, they won’t be able to use stolen card numbers without this code.

Many secure payment gateways like Stripe let you enable CVV checks on all transactions.

6. Utilize Fraud Detection Plugins

As mentioned, many popular payment processors like Stripe and Square have their own fraud detection systems. However, for extra peace of mind, you may want to install an additional tool.

The WooCommerce Anti-Fraud extension enables you to configure advanced verification protections like billing address, customer history and behavior, and high-risk geolocation. It will then automatically block suspicious orders based on your specific configurations.

There’s also the YITH WooCommerce Anti-Fraud extension, which lets you enable several anti-fraud checks and measures. For example, you can set orders made from particular countries as fraudulent, and restrict the number of orders made by a shopper within a specific timespan.

7. Use Security Plugins to Block Bots

Bots are automated programs that hackers often use to exploit vulnerabilities in online stores, like weak passwords.

They perform tasks like brute force login attempts, card testing, or creating fake accounts at a scale that overwhelms your WooCommerce site. To stop them, you’ll need to install a security plugin that’s designed to block bot activity.

Jetpack Security is a comprehensive solution that protects your site from various threats, including brute force attacks. It automatically blocks known malicious IPs before they reach your store. Plus, it comes with a web application firewall that you can configure to allow or block particular IP addresses.

When you purchase a Pressable hosting plan, Jetpack Security is included. All you’ll need to do is install the plugin and enable brute force attack protection from the settings page. With Jetpack Security and Pressable, you’ll also benefit from other advanced WooCommerce security measures, including real-time malware scans and backups. And if you’re hosting with another provider, you can also purchase a Jetpack Security plan (starting at around $240 per year) to quickly enable advanced protection on your site.

8. Add CAPTCHA to the Checkout Process

Another way to deter bots is to implement CAPTCHA at checkout.

CAPTCHA is a challenge-response test that requires visitors to complete a task that’s easy for humans, but difficult for bots. Fraudsters who use bots for card testing or fake orders will be unable to pass the test and complete the transaction on your site.

The downside is that CAPTCHA is inconvenient for legitimate customers. Some might find the tasks frustrating or difficult, leading to cart abandonment. It’s also challenging for individuals with visual or cognitive impairments, especially if it involves images and text.

So, you might only want to implement CAPTCHA if you feel that it’s necessary. You can use an extension like reCaptcha Integration for WooCommerce to add this feature to your checkout pages, as well as login and registration forms.

With this tool, you can use the Google reCAPTCHA version that requires shoppers to tick the “I am not a Robot” box, rather than asking them to complete a challenge. This helps reduce friction.

9. Choose a Quality Host with Security Features

Your web host plays a key role in your store’s security. Any reliable hosting provider for WooCommerce will have measures in place to protect your business from order fraud and other threats.

In the example of Pressable and Jetpack Security you’ll have access to the following features:

• Spam protection for your forms and comment sections
• Real-time backups so that, if something does go wrong, you can restore your website to a clean version (without losing any order data!)
• A 30-day activity log that enables you to track changes on your website and troubleshoot issues
• Malware and vulnerability scanning with one-click fixes
• Brute force attack protection
• Downtime monitoring

All plans also come with a free SSL certificate that encrypts the data transferred between your website and visitors’ browsers, making it difficult for fraudsters to intercept the connection and steal sensitive information.

Plus, Pressable clients also benefit from a web application firewall that can detect and block malicious traffic, ongoing threat monitoring, and automatic updates. Their super-responsive support team can immediately notify you if something goes wrong, provide hack recovery assistance, and give guidance to prevent future issues.

10. Disable Guest Checkout

Guest checkout lets customers place orders without creating an account on your site. This is convenient for anyone who wants to make a quick purchase, but is easily exploited by fraudsters.

Requiring visitors to create accounts helps deter fraudulent activities. Bots won’t be able to use guest checkout to flood your store with fake orders.

Plus, fraud detection plugins and systems are more effective with registered accounts. They can analyze login behavior or saved payment methods to identify suspicious activity.

To disable guest checkout, go to WooCommerce → Settings → Accounts & Privacy in your WordPress dashboard and uncheck the box for Enable guest checkout.

Also, make sure to check the following boxes under Allow customers to create an account by checking During checkout and  On “My Account” page.

How to Manage Mass Fraud Orders

If your store is currently facing a surge in fraudulent orders, take the following steps to regain control:

• Disable guest checkout: This makes it harder for fraudsters to place orders.
• Remove spam user accounts: Audit your user database and delete any suspicious or spam accounts.
• Refund charges you believe are fraudulent: Proactively refunding fraudulent charges can prevent disputes and chargebacks. Signs of fraudulent orders include mismatched billing and shipping addresses, large quantities of high-value items, and the use of disposable email addresses.
• Install an anti-fraud plugin: Deploy tools like WooCommerce Anti-Fraud to automatically flag and block suspicious activity.
• Adjust payment gateway rules: Configure stricter fraud detection settings in your payment gateway. For example, WooPayments offers customizable rules for managing transactions.

Once you’ve dealt with all existing fraudulent orders, implement the strategies discussed in the previous sections to minimize future risks. For example, it might be time for you to switch to a more secure hosting solution like Pressable.

Additional Tips for Fraud Prevention

Are you still worried about WooCommerce order fraud?

Here are some additional tips to keep your business safe:

• Monitor order activity regularly: Review your order history to identify patterns of suspicious activity, like repeated failed transactions or multiple orders from the same IP address. Most fraud prevention extensions like WooCommerce Anti-Fraud come with an analytics dashboard where you can view suspicious activities on your website.
• Blocklist known fraudulent IP addresses and emails: If the anti-fraud detection tool you use keeps flagging the same IP and email addresses, you can blocklist them.
• Educate your staff: It’s also a good idea totrain your team to recognize the signs of fraudulent transactions and respond effectively. Compile a list of valuable resources on the subject. You can even find fraud prevention courses on educational platforms like Udemy.

Finally, it’s important to be informed on the latest security practices. This will help you stay ahead of emerging threats and take any necessary precautions.

Reduce WooCommerce Order Fraud for a Safer Store

No matter how secure WordPress is, fraud is an unfortunate reality of running an online store, but with the right precautions, you can significantly reduce the risk. This means keeping your business safe and protecting your customers’ data.

Security is a top priority at Presssble. All hosting plans provide access to real-time backups, malware scans, brute force attack protection, a firewall, and more. Plus, your WooCommerce store can receive automatic updates, ongoing threat monitoring, hack recovery, and support from WordPress experts.