What’s More Important? Security or Customer Experience? With Effective eCommerce Fraud Protection, You Don’t Have to Choose
As a merchant, you want to do everything you can do to remain fraud-free…
Except you can’t.
Doing “everything” possible to block fraud would degrade the customer experience to the point where shoppers wouldn’t want to deal with you at all. Basically, the only way to block all fraud would be to reject all orders.
It’s always going to be a tightrope: too little prevention, and fraud can become a wildfire that burns up your revenue. Set your fraud parameters too high, though, and you’ll lose sales over customer frustration and false declines. So, where’s the line? Well, it’s unique for every business, and there are multiple factors that impact your needs.
In this post, I want to examine how to build a strategic framework for eCommerce fraud protection. And, I think the most constructive way to think about this is by breaking antifraud practices down into five distinct layers: basic verification, device and behavioral intelligence, machine learning and risk scoring, identity verification, and post-transaction validation and response. Each layer applies a unique methodology and approach.
Recommended reading
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- Top 10 Fraud Detection Service Providers of 2026
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- Tips for Building a Fraud Detection Strategy in 2026
Layer 1: Basic Verification
Your first line of defense includes simple tools to verify addresses, card codes, and devices, as well as additional verification like 3-D Secure and velocity limits.
Let’s start with the most obvious moves – the table stakes, if you will. There are tried and proven tools that are easy to implement yet can have a big payoff. Their job is to help you validate shoppers before they become buyers, and it’s pretty easy to understand how they work.
All buyers — legit or illegitimate — have to go through your checkout process, and that’s often where you can catch them. This list highlights tools that automatically help you detect iffy characters and confirm they are who they claim to be.
Layer 2: Device & Behavioral Intelligence
The second layer of eCommerce fraud protection involves tools to detect suspicious devices, hidden locations, unusual user behavior, or automated sessions that might slip past basic detection.
Fair is fair: if fraudsters are using advanced technology to find loopholes, then you can use advanced technology to block them.
Your plan should also include a layer of more technical fraud tools to catch more advanced fraud that manages to sneak past basic checks, including:
Layer 3: Machine Learning & Risk Scoring
Merchants can use data-driven systems and machine learning to score transactions, learn from previous actions, and share insights across merchants. AI can automate decision-making while flagging edge cases for human review.
Layers one and two are essentially filters that can catch many basic fraud attempts. The rules aren’t very dynamic, though, and therefore can be a bit limited. In the long run you’ll need to add more sophisticated tools; ones that run complicated algorithms and learn from each transaction.
For our next layer, we’re going to create a more dense method of sifting. We’ll be looking at tools that use multiple internal and external data sources, forming a thicker wall for fraudsters to try and circumvent.
As a bonus, machine learning systems capture information from each use, feeding it back into its own data banks. Essentially, it learns from its successes and failures and applies that knowledge to future decisions.
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Layer 4: Identity Verification
For greater confidence, add extra checks for risky or high-value orders. Verify contact info, confirm identity with documents, or use biometrics to ensure the buyer is legitimate.
So far, we’ve been looking at methods that are good for blocking obvious fraud or flagging suspicious orders for you to review. They’re also pretty accurate about opening the gate for legitimate orders, so overall it represents a good set-up.
As I’ve said, though, no prevention method is going to be 100%. In practical terms, that means you generally have to be satisfied knowing you’ve caught most of the bad guys. “Most” may not be good enough if you’re dealing with high-value tickets, though.
When there’s more to lose, you need to be extra careful. So on suspicious orders worth a lot, you might want to dig a little deeper using:
These tools will cause a certain amount of friction in the customer experience. That’s why they’re typically reserved only for suspicious cases of higher value.
Layer 5: Post-Transaction Methodology
Prevent and respond to disputes in order to lower chargeback volume and potentially recover funds. Supply additional information to answer customer inquiries, automatically resolve certain claims, and get alerted before a chargeback is filed. If a chargeback isn’t blocked, you may be able to represent it.
That’s about the extent of what you can do to prevent fraud before the transaction. It’s a great start, but it won’t help much with first-party misuse (also called “friendly fraud”), which happens post-transaction.
Dealing with these chargeback abuse cases may help you recover revenue (or at least lose less of it), but there’s a long-term prevention angle, as well. Remember, your fraud detection system is collecting data as it’s created. It’s learning and improving in real time. That means that, whatever happens with friendly fraud, your system will be better equipped to handle the next case.
AI is the latest weapon in the war against fraud. The AI-driven platform and proprietary technology offered by Chargebacks911® deliver protection that others can’t match.
The fact that you’ll be better equipped to handle the next case isn’t really much comfort right now, though. So, what can you use to stop fraudulent chargebacks from hitting you now? I have some suggestions.
Here’s a good visual representation of how these post-transaction tools work as parts of the overall process:
| Order Insight / Consumer Clarity | Chargeback Alerts | Rapid Dispute Resolution / Mastercom Collaboration | Representment | |
| When it’s used | Before a dispute is filed, when the customer sees the charge | After a dispute is initiated, before it becomes a chargeback | After a chargeback is filed | After a chargeback is filed (last resort) |
| What it does | Helps customers recognize and understand a charge so they don’t dispute it | Warns you of a dispute, so you can issue a refund and stop it from becoming a chargeback | Resolves disputes by automatically issuing refunds based on your pre-set rules | Fights the chargeback by submitting evidence to try and reverse it |
| Prevention or recovery | Prevention | Early recovery / containment | Recovery | Recovery (last resort) |
| Typical outcome | Fewer disputes filed | Dispute stopped via refund | Faster resolution, reduced effort | Win or loss decision |
| Key limitation | Can’t help once a dispute has started | Not all banks participate; requires human action | Focuses on resolution, may miss opportunities | Time-intense and not guaranteed to succeed |
Top 10 eCommerce Fraud Protection Service Providers
The provider you should turn to for fraud detection services depends on the specific areas where you need help. While in no way exhaustive, this list of fraud detection companies does showcase a few of the most reputable vendors and their specialties.
Ratings and reviews were averaged based on real customer reviews from sources including G2, TrustRadius, Software Suggest, and Gartner. The “pros” and “cons” we mention are also paraphrased directly from real, firsthand customer reviews. Providers are listed in alphabetical order:
ClearSale
ClearSale is a fraud and chargeback management tool that uses machine learning techniques to approve orders and detect suspicious transactions. ClearSale’s software solution is used by more than 6,000 eCommerce merchants worldwide, and the company offers a $0 chargeback liability guarantee to its SMB customers.
ClearSale offers integrations with many major eCommerce platforms, including Shopify, WooCommerce, Salesforce, Punchmark, BigCommerce, and others. The company complements its SaaS solution with implementation, customization, and anti-fraud consulting services
Pros:
- Flexible pricing models based on performance or KPIs
- Excellent customer support and onboarding process, backed by a 30-day satisfaction guarantee
- Simple and easy-to-understand dashboard
Cons:
- Customers may experience slow order processing
- Chargeback refunds may take a month or longer to process
- Integrations may require occasional tweaks to maintain functionality
Ekata
Ekata is an identity verification, data validation, and data enrichment provider that is used by more than 2,000 companies around the world. Acquired by payment network Mastercard in June 2021, the company’s solutions help companies combat transaction fraud and mitigate chargebacks.
At the core of Ekata’s platform is its Identity Network, a solution that combines insights from Mastercard Identity with more than a billion behavioral and device data points to create an identity graph of customer profiles. These profiles help Ekata’s customers conduct deeper fraud risk assessments and perform more thorough customer due diligence.
Pros:
- Integrated with Mastercard’s other offerings
- Tailored for financial services firms with KYC/AML obligations
- Exceptional customer identity verification and fraud review capabilities
Cons:
- Expensive and intended for enterprise customers
- Risk scores may not be accurate and may be based off incomplete data profiles
- User interface may be difficult to use
Forter
Forter protects over $50 billion in transactions per year for more than 200,000 eCommerce stores across the world. The company’s platform offers a suite of solutions, including fraud prevention and management, chargeback recovery, abuse prevention, payment optimization, and identity prevention.
The company’s solutions, which can deliver 99% of fraud decisions in under 400 milliseconds, have the potential to reduce chargeback rates by 72% and false declines by 46%.
Pros:
- Automated fraud detection process with manual reviews when necessary
- 100% chargeback coverage for approved purchases
- Developer-friendly API for integration
Cons:
- Limited customization for niches where fraud patterns can be different
- Initial setup can be time-consuming
- Unclear reasons for customer card declines
Kount
Founded in 2007 and acquired by Equifax in 2021, Kount is an AI and machine learning-enabled platform that allows businesses to improve the trust and safety of their offerings. The company collects data from more than 20,000 brands in 250 geographical locations across the world to help customers conduct due diligence, detect fraud, and manage chargebacks
The company’s platform offers payments fraud protection, identity management, and compliance solutions for eCommerce merchants, restaurants, healthcare providers, streaming services, rental car companies, and businesses in other verticals.
Pros:
- Fully-customizable and reviewable fraud decisioning rules
- Dedicated account manager and excellent customer service
- User-friendly interface that’s easy to use
Cons:
- Pricing is not publicly available
- Reports of frequent price increases, especially post-Equifax acquisition
- No chargeback reimbursement guarantee for approved transactions
Microsoft Dynamics 365
Microsoft Dynamics 365 is an enterprise resource planning software suite that combines sales, marketing, finance, and operations tools into a single platform. Among its modules is Fraud Protection, an AI-enabled solution that helps eCommerce merchants analyze connected data streams for malicious activity in real-time.
Microsoft Dynamics 365 Fraud Protection can safeguard merchants from a wide range of illicit activities, including account takeover fraud, refund fraud, fake product reviews, reseller fraud, payment fraud, and free trial abuse.
Pros:
- Seamless integration with other Microsoft products, both inside and outside of Dynamics
- Available as both a cloud and an on-premises offering
- Uses adaptive AI technology that improves over time
Cons:
- Complex setup and onboarding process
- No free trial
- Expensive and intended exclusively for enterprise customers
Radial
Radial is a fraud protection and order fulfillment provider that’s tailored for the eCommerce industry. Radial Fraud Zero, the company’s main anti-fraud service, is a fully-outsourced fraud management solution that protects merchants from unauthorized purchases and lowers chargeback risks.
The company’s offering is backed by a $0 liability guarantee for chargebacks arising from approved orders.
Pros:
- Fully-managed, end-to-end fraud protection solution
- Tailor-made for eCommerce providers
- Can be integrated with other services, like order fulfillment and payment processing
Cons:
- Opaque pricing structure
- User interface may be difficult to use
- Difficult to filter data for more precise insights
Riskified
Riskified is a fraud monitoring and decisioning platform that analyzes over 480 data attributes to reduce fraud and abuse. The solution is tailored to merchants in a variety of different verticals, including retail, luxury fashion, digital products, travel, and athletics.
The company’s real-time fraud prevention solution uses deep learning, smart linking, and decision optimization techniques trained on over 1 billion past data points to make accurate decisions for merchants at scale.
Pros:
- Optimized for compliance with the EU’s PSD2 regulation
- High true positive and low false negative rate in fraud detection
- Flexible and integrates seamlessly with other eCommerce tools
Cons:
- Steep learning curve for some new users
- Limited insight into the fraud decisioning process
- Prices are high and tend to increase often
Sift
Sift is an AI-powered trust and safety platform that helps eCommerce, fintech, and travel companies reduce account takeover, payment fraud, chargeback fraud, and policy abuse risks.
The company’s payment protection, account defense, dispute management, and content integrity solutions help businesses reduce fraud rates by an average of 2.5%.
The company’s fully-customizable platform has been awarded more than 40 patents and is compliant with the EU’s PSD2 and PSD3 regulations.
Pros:
- Tight integrations with other SaaS tools in the eCommerce industry
- Data is easy to search and provides clear summary information via a Sift Score
- Robust fraud decisioning tool that can correctly resolve edge cases
Cons:
- Initial setup process may be cumbersome
- Occasional downtime, user interface glitches, or technical errors
- Opaque risk scoring methodology
Signifyd
Signifyd is a fraud detection tool for eCommerce merchants that detects unusual activity at each stage of the conversion funnel, from account creation and initial login to checkout and refund request.
Customers who implement the solution usually see a 5% to 9% increase in revenue. And, merchants who use Signifyd are backed by the company’s 100% chargeback reimbursement guarantee. If a purchase approved by Signifyd ends up being fraudulent, the merchant is fully indemnified for the loss.
Pros:
- Platform is easy to use and understand
- Integrates seamlessly with other eCommerce tools, like Magento
- The Payments Optimization module is compliant with EU payments regulations and supports strong customer authentication (SCA)
Cons:
- Custom checkout flows are difficult to implement and require code changes
- Customer transactions that are flagged as fraudulent may take time to manually approve
- Can be expensive; not suitable for all SMBs
TransUnion
TransUnion is one of three consumer credit bureaus in the United States. The company maintains the credit histories of more than 500 million individuals and businesses globally, granting it access to data that can be used to combat fraud at inception.
The company’s fraud prevention, advanced analytics, investigative, customer engagement, and communications solutions equip financial services firms, healthcare companies, and public sector agencies with the tools to prevent and detect fraud.
Pros:
- Full suite of fraud prevention and detection tools for enterprise clients
- Deep insights into consumer and business via extensive credit-related data collection
- Fraud investigation capabilities for companies who need to locate individuals
Cons:
- Strictly an enterprise product; not for SMBs
- Information heavily based on past history rather than predictive insights
- Opaque pricing structure
Where Do You Go From Here?
eCommerce fraud protection isn’t a one-and-done deal, but having your strategy in place allows you to protect your current operation while enabling you to scale seamlessly when you need to.
Of course, talking about all of this and actually putting it into practice are two different things.
We’ve covered a lot of moving parts in this post. You may be wondering how you can possibly get all of it done. Fortunately, you don’t have to do it alone.
The experts at Chargebacks911® can help you uncover what you need, then design and implement a program that does just what you need it to. Call us today for more information.
FAQs
What’s the difference between fraud prevention and chargeback protection?
Fraud prevention stops unauthorized transactions before they complete. Chargeback protection helps you manage disputes after a transaction has occurred. The latter encompasses both true fraud that slipped through and friendly fraud from legitimate customers.
How much should I spend on fraud protection?
Industry benchmarks suggest 0.5-1.2% of revenue for fraud prevention tools. But the real question is ROI: are your protection costs lower than your combined fraud and false decline losses would be without them?
What's a good fraud rate to target?
Most healthy eCommerce businesses maintain fraud rates under 1%. But focus equally on your false decline rate — declining good customers often costs more than fraud itself.
Do I need both a fraud prevention tool and chargeback management?
Yes. They address different parts of the problem. Fraud prevention reduces volume; chargeback management handles what gets through, including friendly fraud that no prevention tool can stop.
