How to Avoid Buyer Fraud

Christmas is just around the corner, that means it’s likely to be a manic month for your business. But it’s not just check-outs that are likely to be busy, it’s the fraudsters that target them.

If you run an online business or have an online store, you may be at risk of experiencing buyer fraud - fraudulent buyers who target your business for goods and services they don’t intend to pay for themselves.

What is buyer fraud?

Buyer fraud can take a few different forms depending on how the fraud is carried out.

buyer fraud

True fraud

True fraud occurs when a buyer uses stolen card information to get free goods or services. It’s important to know that even a successful transaction could be from a payment card that hasn’t yet been reported as stolen or compromised. The real cardholder may initiate a dispute as they did not actually make the purchase. The funds must be returned to the rightful cardholder which means that not only do you face a loss of the delivered goods, but also its cost.

Fraudsters have also been known to request that a legit business forward payment onto another, illegitimate, one. For example, a fraudulent customer may pay a florist for wedding flowers and ask that they forward a payment to the wedding planner, who is in on the scam, on their behalf. This places your business between two fraudulent parties, and in accepting more of the fraudster’s money, they are set-up to demand more back during the chargeback process.

How to avoid true fraud

1. Know your customer

If something seems off, try getting in touch with the buyer. Do a quick Google search of their information or ask for a government issued ID or proof of billing.

2. Monitor declined cards

Declined cards can be a sign that someone is trying to pay using stolen payment card information. If you notice an order with mismatched billing and shipping information, review possible attempts to use multiple cards by logging into your Dashboard, selecting Sales > Transaction Status. If a customer attempted to pay with multiple cards within a short time frame, refund the successful payment.

3. Match billing and delivery postcodes

If you’re shipping an item, check whether the billing and delivery postcodes match. If they don’t match, ask your customer why. Their answer should make practical sense. If it doesn’t, refund the payment.

4. Be vigilant

If something seems off about a buyer, you can always provide a refund. Some sellers believe that it is easier to give a refund when they suspect fraud rather than run the risk of a fraud chargeback. The time, effort and black mark against your name in the eyes of the issuing credit card company doesn’t seem worth it when a refund can be given in a few clicks, in either case, the sale is lost.

5. E-commerce Platform Merchants

Third party e-commerce platforms (such as Bigcommerce, Weebly and Ecwid) may offer additional solutions such as Signifyd to minimise your risk. While we currently don’t offer this option, you may be able to find a solution on these platforms that works best for your business.

Buyer abuse and chargeback fraud

Buyer abuse occurs when a buyer attempts to avoid paying for a legitimately purchased good or service. Merchants can be held liable for these charges, which means you could be out the goods or services, your time and the payment.

This usually takes one of the following forms:

1. Unauthorised claims

The cardholder authorised the purchase but now claims that the payment wasn’t made by them to avoid paying for the goods. They instigate a chargeback with their bank, claiming that the purchase was fraudulent.

2. Product not delivered or as described

The customer claims that the item they ordered was not delivered when, in fact, it was, or they may dishonestly claim items are different to those purchased in order to gain their money back. By claiming their item never arrived or their order was incorrect, these buyers can instigate a chargeback, prompting the seller for an unwarranted refund.

How to avoid buyer abuse

Square will represent you in the dispute process free of charge and our team of specialists will use their expertise to help you along the way. There are various things that can help you defend yourself against unwarranted chargebacks so that in the event that one occurs, you have a higher likelihood of being able to successfully defend the payment.

1. Delivery confirmation

If you’re shipping a product, make sure to keep the tracking information and a delivery receipt. For large orders, require a signature confirmation at delivery.

2. Match billing and shipping postcodes

If you’re shipping an item, check whether the billing and shipping postcodes match. Again, approach your customer for an explanation if they don’t match. If their answer is not enough to allay your suspicions then refund the purchase.

3. Keep records

Keep records of your orders and any communications with your customers- if a customer does file a chargeback, this information will be essential in fighting it.


If you receive chargebacks when selling with Square and we determine that you have followed best practices, Square will cover up to £250 in eligible chargebacks each month.

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