Did you know? Since Shopify's inception, gross profit dollars have risen by 6%, reaching $655.6 million in the second quarter of 2022, up from $620.9 million in the previous year.
Impressive, right? However, such significant growth also attracts cybercriminals who target merchants with unauthorized transactions, leading to chargeback requests. These fraudulent activities create challenges for Shopify merchants in running their businesses. To address this issue, various fraud prevention apps have been introduced to assist you.
Given that each app comes with its own set of features and pricing structures, it can be confusing to decide which one to select. To simplify your decision-making process, we have put together a list of the top 8 Shopify fraud prevention apps, including essential information and effective strategies.
What is Shopify Fraud?
Shopify merchants frequently encounter various types of scams and fraud, including stolen card information, account takeovers, and chargebacks.
A chargeback occurs when a customer disputes a transaction with their issuing bank. The bank then evaluates the evidence and reassigns the chargeback cost to the merchants through the card network.
Recent studies indicate that global payment fraud is on the rise and is projected to cost merchants $40.62 billion. Some contributing factors include:
- Double billing
- Incorrect amounts
- Unrecognized purchases
- Items not received by the customer
- Customer dissatisfaction
- Malicious fraud, such as stolen goods
- Friendly fraud
What is Shopify Fraud Prevention?
Shopify’s fraud analysis, or fraud protection, aids in identifying fraudulent orders by examining high-risk transactions to prevent potential chargebacks. Processing these high-risk orders can lead to an increased number of chargebacks, which may disable payment processing and result in removal from Shopify Payments.
This fraud analysis tool is specifically designed to work with online credit card orders to validate payments. The risk of fraud also extends from merchants to customers, with fake stores operating on the platform.
A Fakespot analysis revealed over 25,000 stores engaged in various forms of fraudulent activity, including counterfeiting, privacy breaches, and the sale of fake reviews.
Let's Unwrap the 8 Best Fraud Prevention Apps for Shopify
1. NoFraud Fraud Protection
by NoFraud, LLC
The NoFraud Shopify app is among the top-rated eCommerce fraud prevention solutions, providing individual, real-time assessments for every transaction. It leverages thousands of data points along with advanced fraud detection technology.
This fully automated app is overseen by in-house experts, requiring no input from merchants. All reviews and assessments are handled by NoFraud.
Key Features
- Chargeback Protection: NoFraud reimburses the full chargeback amount for any fraud-related chargeback on an order approved by NoFraud.
- Flexibility in choosing which orders to screen.
- Customized review process.
- Prevention of fraudulent Shopify orders before they are processed by third-party fulfillment companies.
- Comprehensive reporting on order status, review outcomes, and fraud attempts.
Rating: 4.8/5.0
2. ClearSale Fraud Protection
by ClearSale
ClearSale is an excellent end-to-end payment fraud protection system that helps merchants prevent fraud and chargebacks. When a chargeback occurs, this app analyzes the situation to assess whether the order was fraudulent on Shopify.
It offers precise identification and control over fraud risk through a manual review process without AI involvement. Every suspicious transaction is evaluated by an experienced analyst, ensuring a safer environment.
Key Features
- Multiple performance-based pricing plans.
- Enhances your ROI with a tailored solution.
- Customized solutions designed to surpass KPI targets and achieve optimal ROI.
- Regular updates to tools and rules, along with dedicated fraud management staff, to stay ahead of evolving fraud tactics.
- Reduces operational burdens.
Rating: 4.8/5.0
3. SEON Fraud Prevention
by SEON Technologies Ltd.
SEON is a fraud prevention and detection app designed to strengthen businesses with enterprise-level features. It includes a powerful scoring engine that identifies potentially harmful orders and detects fraudulent patterns.
This app allows you to scan over 50 digital and social signals in real-time to verify the identity of the individual placing the order.
Key Features
- Automatically approves transactions and enhances the conversion rate.
- Live email lookup for added verification.
- Automatically cancels and refunds transactions without any merchant input.
- No chargeback guarantee enables merchants to accept more transactions deemed risky by others.
Rating: 4.9/5.0
4. FUGU: Every Payment Counts
by fugu
This anti-fraud app is designed to reduce order declines while effectively preventing fraud. FUGU examines the information provided by consumers during the checkout process.
Additionally, various optional chargeback guarantee services are available in this app, which acts as a great addition.
Key Features
- Unique Hybrid Protection mode.
- Fully packed and pre-configured plans.
- Payment monitoring and KYC automation.
- One-click integration with no coding knowledge needed.
- Optional Chargeback Guarantee service.
Rating: 5.0/5.0
5. Disputifier: Smart Chargeback
by Disputifier
This AI-powered Shopify fraud detection app simplifies handling chargebacks manually. When a chargeback occurs, the system analyzes both the chargeback and the customer who initiated it.
It creates a tailored response based on factors like the cause of the chargeback, fraud analysis, and fulfillment status. This response is then submitted automatically, making the process quicker and more efficient.
Key Features
- AI-driven chargeback success rates.
- Guaranteed industry-leading chargeback success rate.
- Comprehensive analytics to track your success rate, dispute ratios, and key performance metrics.
- Highly personalized responses for each case.
- Order Not Delivered Protection, tailored for dropshippers, addresses issues with delayed, lost, or unfulfilled orders.
Rating:5.0/5.0
6. Eye4Fraud | Fraud Protection
by Eye4fraud Inc.
As a credit card fraud protection app for online sellers, this solution provides personal account managers instead of bots or tickets, ensuring responsive service. It also blocks fraudulent orders from completion, helping reduce chargebacks and other associated costs.
The app can be seamlessly activated within your Shopify admin, expanding your reach to new markets globally.
Key Features- Instant verification with Machine Learning-powered software.
- Dedicated Account Manager with same-day response service.
- Suspicious orders flagged for manual review by a specialist team.
- Almost 100% of orders are instantly approved, with manual verification for select cases.
- Quick and easy setup process.
Rating: 4.7/5.0
7. FraudJudge Fraud Prevention
by Pluginhost B.V.
This app aids in protecting against fraudulent orders and minimizing chargebacks by detecting high-risk orders automatically. You can establish custom rules to flag unusual order quantities, high amounts, and risky customers or addresses.
It also enables customer identification verification, either automatically or by manually requesting government ID, passport, ID card, or driver’s license.
Key Features- Enhances store security and optimizes risk management.
- Provides customer identification through automatic or manual ID verification requests.
- Prevents fraudulent orders before they are completed.
- Utilizes buyer identification tools for enhanced safety.
- Verifies customer age prior to shipping to prevent gift card fraud or abuse.
Rating: 5.0/5.0
8. FraudLabs Pro SMS Verification
by Hexasoft Development
FraudLabs Pro offers a free fraud screening process to easily identify high-risk transactions and reduce chargebacks. It detects high-risk orders and automatically notifies customers via email if their order is canceled.
The app’s fraud protection module acts as a fraud filter and supports an SMS verification add-on, allowing businesses to confirm the purchaser's identity.
Key Features- Utilizes over 50 metrics, including IP geolocation, proxy, email validity, credit card data, transaction velocity, and more.
- Offers manual review for additional assurance.
- Automatically cancels high-risk orders and notifies customers.
- Provides SMS verification for enhanced security.
Rating: 3.7/5.0
What Causes Shopify Chargebacks?
There are generally three main reasons why your Shopify store may receive a chargeback request:
- Merchant error: This can happen if you accidentally ship the wrong item, forget to apply a discount, or include an incorrect description of a product.
- Unhappy customers: Occasionally, an unsatisfied customer may initiate a chargeback request directly.
- Unauthorized payments: Also known as "family fraud," this occurs when family members make unauthorized purchases on Shopify.
Another common reason for chargebacks is fraud, which can fall into two categories:
- Obvious fraud: This occurs when a fraudster steals a credit card number, prompting the legitimate cardholder to request their funds back.
- Friendly fraud: A type of chargeback abuse where a legitimate cardholder initiates an illegitimate chargeback request.
Tips to Prevent Shopify Chargebacks
Here are the top tips to avoid Shopify chargebacks:
- Set up order-tracking workflows: Allow customers to track their orders in real-time to minimize issues.
- Be prompt about shipping: Studies show that 45% of chargeback requests are due to delivery delays.
- Fine-tune your customer service: Ensure clear communication throughout the buying journey to help avoid chargebacks.
- Revise store policies: Clearly present terms and conditions to reduce misunderstandings.
- Write accurate product descriptions: Provide correct product details to prevent customer miscommunication.
- Investigate suspicious orders: Review any questionable orders before processing.
- Ensure contact information is easily accessible: Make sure customers can reach out if needed.
- Process refunds promptly: Issue refunds as quickly as possible to avoid disputes.
- Refine your packaging: Improve shipping packaging and replace defective items quickly.
- Include a subscription cancellation policy: Provide clear information on canceling subscriptions.
- Refund duplicate charges: Immediately issue a refund if a customer is double-charged.
- Set a clear billing statement: Specify the name that will appear on customers' credit card statements.
