What Is WooCommerce CNP Fraud?

Thousands of dollars. That’s how much you can lose from CNP fraud if you don’t have WooCommerce security..

For WooCommerce store owners, CNP (Card Not Present) fraud can wreak havoc on your business. For example, when a fraudster uses stolen card information to make purchases on your site, it can leave you to shoulder the costs of lost inventory and refunds. 

You’d have to pay chargeback fees, often adding insult to injury. Moreover, frequent fraudulent activities can severely tarnish your business’s reputation, making future customers wary of shopping with you. Every time a fraudulent transaction occurs, you’re faced with the challenge of disputing the charges, which can be both time-consuming and stressful. This is especially detrimental for small businesses that may lack the resources to handle such issues efficiently.

The good thing is that you’re not helpless. You can fight back and this article will show you how. 

TL;DR: Use a combination of security measures to protect your WooCommerce store from CNP fraud. Install a powerful firewall like MalCare that blocks attack requests, and a fraud prevention plugin to protect you from financial consequences.

What is CNP WooCommerce fraud?

CNP (Card Not Present) transactions are all transactions that are made without the cardholder or the card physically present at the point of transaction. This would include all online transactions, over-the-phone orders, mail orders or recurring payments as well. CNP fraud is an umbrella term for any fraud that exploits the lack of a physical card. If you don’t have a firewall or good fraud prevention, you may be effected by one or more of the following:

• Skimming attacks: Fraudsters steal credit card information using malware that is injected on your site. The malware usually steals the information from the checkout page and is then used for unauthorized transactions.
• Card testing fraud: Fraudsters test the validity of stolen card information by making many small purchases. They are trying to determine which cards are active so they can make larger transactions. They also use bots to try thousands of cards in a very short span of time.
• Phishing scams: This is typically done through fake emails or websites. They are designed to trick individuals into providing their credit card information. 

Refund fraud: Fraudsters use stolen credit card details to make purchases and then request refunds to a different account or method. Simply put, they are laundering the stolen funds.

How do you identify WooCommerce CNP fraud?

A great way to fight CNP fraud is to be vigilant and recognize its signs. This becomes crucial for protecting your WooCommerce store. Here are some common indicators that can help you identify potentially fraudulent transactions:

• Be cautious when the billing and shipping addresses do not match. This could be a sign that the fraudster is using stolen card information.
• Multiple fake orders placed using the same billing address but different shipping addresses can be a red flag for fraudulent activity.
• Be wary of excessively large orders, especially if they are atypical of your store’s normal sales patterns. Large quantities of the same item in one order can also indicate that the goods might be resold.
• Frequent orders from the same fraudulent IP address within a short period can suggest that a fraudster is testing card information.
• Orders shipped to geographic regions known for high fraud rates or flagged as high-risk can be a warning sign.
• Orders with phone numbers that don’t work or whose area codes do not match the billing address should raise suspicion.
• If you notice multiple attempts to enter correct payment information, it could mean someone is trying various stolen card details until one succeeds.
• Be alert for orders made at odd hours of the day or night, which can indicate fraudulent activity, especially if it doesn’t align with your customer’s typical buying behavior.
• Transactions using a currency different from the billing address country’s standard can signal fraud.
• Are you seeing requests for expedited or overnight shipping without concern for shipping costs? This could mean the fraudster is looking to get the goods quickly before the fraud is detected.

How do you prevent WooCommerce CNP fraud?

By default, your WooCommerce site is not secure enough to fight hackers. You have to put a lot of preventive measures in place. We’ve made a list of WooCommerce security steps that can help you. 

• Install a security plugin like MalCare: Comprehensive security plugins offer bot protection, firewalls, and scanners, all of which are crucial for defending against cyber threats. Bot protection stops automated attacks, firewalls filter incoming traffic, blocking unauthorized access, and scanners identify vulnerabilities to keep your site secure. MalCare does all of it for free. 

• Use secure payment gateways: For WooCommerce store owners, using secure payment gateways is crucial to safeguard transactions. Stripe, for example, offer robust features to protect against fraud. For example, Stripe Radar employs machine learning to identify fraud patterns, providing an extra layer of security. Additionally, the 3D Secure feature enhances transaction safety by requiring additional verification from the cardholder, such as an OTP or password. These advanced security measures are seamlessly integrated into a Stripe account,

• Permit only customers with accounts to make purchases: This is a strategic way to bolster security. Requiring account creation ensures that you can monitor user activity and maintain a verified record of customer interactions. This reduces the likelihood of fraudulent transactions by adding a layer of accountability and traceability. Go to the WooCommerce settings tab and navigate to the Accounts and Privacy tab.

• Implement login authentication: Strong authentication methods, such as Two-Factor Authentication (2FA) and CAPTCHA, are essential for protecting your site from unauthorized access. 2FA adds an extra layer of security by requiring users to provide a second form of verification, such as a code sent to their phone. CAPTCHA challenges help distinguish human users from automated bots, preventing automated attacks and fraudulent account creation.

• Install anti-fraud plugins: Installing anti-fraud plugins is another effective measure to safeguard your WooCommerce store. These plugins can detect, flag, and block suspicious activities in real-time. They offer features like transaction monitoring, automated fraud detection, and reporting tools that help identify risky transactions before they are completed.

• Implement Address Verification System (AVS): AVS compares the billing address provided by the customer with the address on file with the card issuer. This process helps reduce mismatches, as transactions with mismatched addresses can be flagged or declined, reducing the likelihood of fraud. It also enhances security by ensuring only legitimate transactions, where the billing and shipping addresses are consistent, are processed. You can use a plugin like WooCommerce Address Validation.
• Enforcing Card Verification Value (CVV): The CVV is a three- or four-digit number on the card that helps verify if the customer has physical access to their card. This extra security step significantly reduces the risk of fraudulent transactions, as it acts as an additional barrier against stolen card numbers being used without authorization.
• Review orders manually: Manual order review is also crucial for identifying high-risk transactions. This involves flagging and manually reviewing orders based on specific risk indicators, such as large order values, bulk purchases, or multiple orders from the same IP address within a short timeframe. 
• Install SSL: Using SSL certificates to encrypt data exchanged between your WooCommerce store and customers is non-negotiable. SSL encryption safeguards sensitive information such as payment details, ensuring that data intercepted during transmission is unreadable by unauthorized parties. This measure protects your customers and instills confidence in them, as SSL certificates are often visible indicators of a secure site.

• Set transaction amount limits: This is another effective strategy to mitigate high-value fraudulent transactions. By capping the transaction amount, you limit the financial damage that could arise from a single fraudulent activity. This ensures that even if a fraudulent transaction does slip through, the impact on your business is minimized.
• Keep everything updated: Regularly updating your software is vital for maintaining robust security. Software updates often include patches for known vulnerabilities that could be exploited by fraudsters. Staying current with updates for your WooCommerce platform, plugins, and other related software helps ensure that your site remains secure against emerging threats.
• Use compliant hosting: Using PCI-DSS-compliant hosting ensures that your site adheres to industry standards on securely processing, storing, and transmitting cardholder data. Compliance with the Payment Card Industry Data Security Standard (PCI-DSS) is not just a best practice but a mandatory requirement for e-commerce businesses dealing with card payments.
• Educate your customers: Telling users about CNP fraud and safety practices is equally important. By informing them about secure payment practices, phishing scams, and how to recognize suspicious activity, you empower them to take part in safeguarding their personal information. An informed customer is less likely to fall prey to fraud, thus reducing the risk for your business as well.

Financial strain of WooCommerce CNP fraud

CNP fraud poses a significant threat to the finances of WooCommerce sites. It often results in fraudulent transactions where the merchant must bear the brunt of the cost. 

Chargeback fees

When the legitimate cardholder disputes the charge, the merchant typically incurs a chargeback fee. This includes the transaction amount plus additional penalties imposed by the payment processor. This chargeback fee can be quite substantial, compounding the financial burden. Stripe, for example, charges $15 for a chargeback. Now, imagine if you were under a card testing attack where you’re seeing thousands of fraudulent purchases. If you were being charged $15 for each transaction, the costs would build up.

Lost revenue

There is the issue of lost revenue from the fraudulent sale. When a product is purchased fraudulently, it is often shipped before the fraud is detected. This means that the merchant loses both the product and the revenue from the sale. 

Higher payment processing

Moreover, persistent occurrences of CNP fraud can lead to higher payment processing costs. Payment processors and banks might categorize the business as high-risk, resulting in higher transaction fees. 

Loss of customers

Let’s also talk about the loss of revenue from the loss of customers. For an online retailer, credibility is crucial. Customers make purchasing decisions based on their trust in the merchant. Customers may not buy from your site if they think their financial and personal data is not safe. This directly translates to a reduction in sales and, consequently, revenue.

Fines for regulatory violations

You can also be fined for not meeting regulatory standards of security. Different areas have their own set of regulations to protect your customer’s data. The GDPR, for example, is a data protection law enacted by the European Union (EU). In 2020, British Airways was fined £20 million (approximately €22 million) by the UK’s Information Commissioner’s Office (ICO) for failing to protect the personal data of more than 400,000 customers. They had not secured their site well enough and hackers gained access to their customers’ data. This fine was one of the most significant penalties imposed under the GDPR.

Resources lost to resolving issues

Finally, we have to remind you of the loss of resources to resolutions. Maybe you’re fielding customers’ calls for refunds. Maybe you’re stuck on hold with your payment processor’s support team. Whatever the case, the time and money you can lose in firefighting these hacks is incredible.

Final thoughts

Fraudulent orders can be exceedingly stressful for multiple reasons, including the financial strain they impose, the extensive time and resources needed for order monitoring, and the countless hours spent dealing with disputes. These challenges can drain your business’ resources and affect your overall profitability. 

To mitigate these risks and streamline your operations, we strongly recommend installing MalCare alongside a robust fraud prevention plugin like FraudLabs Pro. Doing so will help secure your platform, protect your financial interests, and save you valuable time and effort in managing your orders.

FAQs

What is CNP fraud?

CNP (Card Not Present) fraud refers to unauthorized transactions made without the physical card or the cardholder being present at the point of transaction. This typically occurs online or over the phone and is a significant risk for e-commerce stores, including WooCommerce stores. Fraudsters use stolen card information to make purchases, leading to financial losses and potential damage to the business’s reputation.

How do I prevent fraud orders in WooCommerce?

To prevent fraud orders in WooCommerce, you can implement several measures:

• Install security plugins: Use plugins like MalCare that offer bot protection and a firewall that can block fraudulent actors. It can also scan for malware and clean it in one click. So it will help in cases like a skimming attack as well. 
• Use fraud prevention plugins: Plugins like FraudLabs Pro can help detect and prevent fraudulent transactions.
• Enable CAPTCHA: Adding CAPTCHA to your checkout process can reduce automated fraudulent activities.
• Address verification: Use address verification services (AVS) to confirm that the billing addresses match the cardholder’s registered address.
• Monitor orders: Regularly review orders for signs of fraud, such as mismatched billing and shipping addresses, unusually large orders, or multiple small orders from the same IP address.

Can I blacklist a customer in WooCommerce?

Yes, you can blacklist a customer in WooCommerce. Plugins like WooCommerce Anti-Fraud or Ban Hammer allow you to block customers based on specific criteria such as email addresses, IP addresses, or shipping addresses. This helps in preventing repeat fraud attempts from known sources.

What are some examples of WooCommerce CNP fraud?

Some examples of WooCommerce CNP fraud include:

• Fraudsters using malware to steal credit card information that is then used for unauthorized transactions.
• Making small purchases to test the validity of stolen card information before making larger fraudulent transactions.
• Deceptive emails or fake websites tricking individuals into providing their credit card information.

Fraudsters making purchases with stolen card details and then requesting refunds to a different account, effectively laundering the stolen funds.