WooCommerce CNP Fraud: What is it and How To Prevent It? [8 Effective Ways]

WooCommerce CNP (Card Not Present) fraud can cost your business thousands of dollars. This is one of the common WooCommerce frauds that can severely impact your business’s reputation and revenue.

In 2023, CNP fraud losses in the US were estimated to be $9.2 billion. This is expected to increase to $12.87 billion by 2026.

You might be wondering how it can impact my WooCommerce store. Keep reading, as we are here to educate you about WooCommerce CNP fraud.

In this article, you will learn what CNP fraud is, how it impacts WooCommerce stores, and eight easy and effective strategies to prevent it.

Let’s get started!

What Is CNP Fraud?

CNP (Card-Not-Present) fraud occurs when a transaction is made without the physical presence of a payment card. It typically occurs online, via phone, or through mail-order purchases. In this type of fraud, the criminal uses stolen credit or debit card information to make unauthorized purchases or payments. Fraudsters obtain stolen card details through social engineering or purchase them from the dark web.

They use this information to make purchases on websites or over the phone where a physical card is not needed.

This fraud is extremely difficult to detect because credit card frauds are usually traced by checking IDs or a chip-and-PIN system. Both tracking tools are absent in a CNP fraud, making it extremely difficult to trace the perpetrator.

In most countries, cardholders are not held liable for unauthorized transactions made using their card information, though they must report the fraud promptly.

How CNP Fraud Affects WooCommerce Stores

CNP fraud can be detrimental to WooCommerce stores and their owners in terms of cash and reputation. Here are four common setbacks of a CNP fraud:

1. Chargeback Fee and Fines

Usually, payment processors impose penalties when customers request refunds or chargebacks. Additionally, the merchant is charged a chargeback fee, which is usually substantial. When multiple chargeback orders are combined, these costs can reach hundreds of extra dollars, causing severe financial loss.

For example, Stripe charges $15 for a chargeback. Only 07 chargeback orders will cost you $105. You can only imagine the costs if you were under a card testing attack (aka carding) when hackers test thousands of cards by making small purchases and then request chargebacks.

Also, don’t forget the fines for not meeting the necessary security standards. Different areas and states have their fines and regulations for protecting customer data. These fines can be significantly higher than the fee payment processors charge. Both financial losses combined can become a major setback for your business.

⚠️ The charges can vary depending on the countries or states. For an accurate calculation, it’s best to check the official website of a payment processor.

2. Lost Product and Revenue

If you detect the issue late, the fraudster will request the chargeback after the product has been shipped; that way, you will lose both the product and the revenue from that sale. If multiple instances like this occur, you lose a chunk of your merchandise and tons of revenue.

3. Higher Payment Processing Fee or Bans

Persistent instances of WooCommerce CNP frauds can force payment processors to flag your business as high-risk or illegitimate. That will increase your payment processing fees or may even result in your account being banned. This scenario will also impact legitimate customers and may cause other payment failed errors.

4. Loss of Customer Trust

Payment fraud incidents like CNP can cause a loss of customer trust. Customers are unlikely to purchase unless they feel confident about your website, and any such incident may help them validate their decision. Additionally, a loss of customer trust translates to negative reviews, which can result in a loss of credibility, and you must be aware of how vital credibility is for online businesses.

4 Common Methods Used in CNP Fraud

Previously, we said WooCommerce CNP fraud uses compromised or stolen cards. It’s vital to understand how fraudsters obtain these cards so you can protect yourself from becoming a victim.

1. Social Engineering

Fraudsters use social engineering to manipulate or trick users into leaking their sensitive card information. For instance, they may pose as a colleague, friend, or any one of the victim’s close ones to send emails or texts asking for sensitive information. Since the victim will perceive them as close, they will more likely share the information without a second thought.

Learn more about such scams in our definitive guide about Social Engineering Attacks. 

2. Buying From the Dark Web

Scammers buy datasets that include thousands of credit card information. Later, they perform card testing or carding to discriminate between real and fake cards. We already discussed the dangers of card testing attacks. Unfortunately, these are a significant part of WooCommerce CNP fraud.

Perpetrators also leverage automated scripts that roam the internet and repeatedly try card testing.

3. Man-in-the-Middle Attacks (MITM)

As the name suggests, these attacks occur when fraudsters position themselves between the user’s browser and the website, eavesdropping on the incoming information. This usually happens on websites that use HTTP instead of HTTPS.

When users use their credit card to make a purchase on an unsecured website, the information is sent in a plain text file that allows perpetrators to easily steal sensitive information.

4. Phishing

Scammers create phishing sites that are identical to a genuine website or store. For example, you may land on a website that looks exactly like a store or a website that you often visit. You may end up purchasing something without noticing anything suspicious.

In that case, your sensitive information will be sent to the scammer, allowing them to use that card for CNP fraud.

How to Detect a WooCommerce CNP Fraud

Before you learn to mitigate the risks of WooCommerce CNP fraud, you must understand how to detect it. Spotting the issues or understanding the algorithms will allow you to catch fraudulent purchases before they become a severe problem.

• Unmatching Shipping and Billing Address: Checking for billing and shipping addresses can give away the authenticity of an order. Usually, legitimate entries will have identical addresses for both billing and shipping.
• Unusual Orders at Unusual Times: Every WooCommerce store has active and not-so-active time. Simply put, when you get the most sales and when crickets chirp due to non-activity. When you get excessively large orders on times when you barely get any sales, it can be a sign of CNP fraud.
• Frequent Orders from One IP Address: Frequent offers from one IP address are a definite sign of WooCommerce CNP fraud. 
• Unmatching Postal Code: If your store allows purchases directly via phone call, you may notice a caller’s area code doesn’t match the billing address. That is a strong sign that the caller is using a stolen card.
• Using Suspicious Currency: If the buyer is using a currency that doesn’t match the currency of the billing address, that is a red flag. For example, the buyer is paying in USD but has a card with a billing address in the UK.
• Check Buyer Country: Some countries have higher eCommerce fraud rates than others. Thus, be extra vigilant of any of the above-mentioned signs coming from such countries. 

8 Effective Tips to Prevent WooCommerce CNP Fraud

Now that you know how to detect CNP fraud, let’s examine the precautions you must take to keep your WooCommerce safe and secure.

1. Install a Security Plugin

The first step to protect your WooCommerce is to install a reliable security plugin. Most security plugins like Jetpack provide fantastic security options like firewalls, bot protection, etc. In fact, Jetpack also offers a dedicated anti-brute force option that allows advanced protection from the cyberattack.

MalCare is also a good alternative.

Pro Tip: Combining the power of a security plugin with a WooCommerce anti-fraud extension can enhance WooCommerce CNP fraud prevention. 

2. Use Secure Payment Gateways

To prevent WooCommerce CNP fraud, it’s essential to use secure payment gateways. These gateways are the tunnels used to receive and send payments, and ensuring their security validates the security of the transactions.

PayPal and Stripe use machine learning and other AI-powered solutions to minimize fraud. The machine learning algorithms help them understand patterns of fraudulent activities and filter payments. The best part is that machine learning gets better every time it catches unusual patterns, which means that in the near future, we might see a perfect fraud prevention solution.

3. Implement Strong Login Authentication

Requiring additional steps before logging in can prevent brute force, credential stuffing, and other bot-related cyberattacks. To enhance your login security, you can install All-in-One Login. 

The plugin offers multiple login protection features, such as reCAPTCHA, 2FA, and limit login attempts. These features will stop bot account creation, ensuring no bot enters your website.

4. Disallow Guest Checkouts

Creating an account before checkout reduces fraudulent offers by eliminating bot checkout activities. Moreover, this also allows you to monitor user activity, which reduces fraud activities because you can easily trace the fraudster.

To enable this feature, navigate to WooCommerce settings >> Accounts & Privacy >> uncheck the Enable guest checkout box.

5. Implement Address Verification (AVS)

Install an address verification extension such as Postcode, Address Validation for WooCommerce, etc. It helps validate and auto-fill customer addresses to reduce misdeliveries, improve customer service, and, more importantly, prevent fraudsters from entering fake addresses.

6. Enforce Card Verification Value (CVV)

Card verification value (CVV) is the three or four-digit number usually on the back side of the card. Enforcing users to enter this number while purchasing can ensure they have access to the physical card, hence minimizing the risks of WooCommerce CNP fraud.

Most plugins used for setting up payment gateways, like WooCommerce Stripe Payment Gateway, offer a dedicated CVV feature, which you can effortlessly enable from the options. 

7. Review Orders Manually

Fraudsters work tirelessly to come up with the latest techniques to circumvent automated fraud prevention software. Manually reviewing all or at least suspicious orders can minimize CNP and other kinds of WooCommerce fraud.

8. Install SSL Certificate

Last but not least, install an SSL certificate to encrypt communication between your WooCommerce store and customers. Earlier, we shed light on how sensitive data is sent in plain text, which can be eavesdropped on or altered. SSL ensures that the sensitive information remains unreadable. That way, even if a hacker finds it, it is useless.

Most hosting websites allow free SSL certificates with any hosting plan. Otherwise, you can use free SSL services like SSLs, ZeroSSL, Let’s Encrypt, etc., to obtain an SSL certificate for free. 

Final Words

WooCommerce CNP fraud, or credit card fraud in general, is very common. WP Engine reported that it is one of the most common forms of online fraud. It impacts approximately 30,000 Americans every day.

Hence, securing your WooCommerce store from such common fraud can accentuate your customers’ safety and make them feel secure on your website, enticing them to buy more, which can eventually help you generate more and more revenue.

If you want to enhance your WooCommerce store’s security with an additional password layer, try the Password Protected and All In One Login plugins combined.

WooCommerce CNP Fraud — FAQs