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Shopify fraud analysis: How it protects merchants?

Shopify fraud analysis: How it protects merchants?

With the advent of the development of technology, customers have changed from face-to-face transaction to online transaction because of its convenience. Thus, eCommerce is a fertile landscape for fraudulent activities. Have you ever thought about how to protect yourself on Shopify? In this blogpost, I will give you a big picture of Shopify fraud analysis. I ensure that it will protect you from potential threats of fraudulent actions.

Shopify fraud analysis

How is the process of Shopify fraud analysis?

After receiving an order, the Shopify system automatically sends the scan of a transaction to Shopify fraud indicators as well as send recommendations to store owners about it. Hence, it enables you to easily assess whether this transaction is a potential fraudulence or not. If you don’t want to be taken in, please follow these instruction to examine a transaction:

View the Fraud Analysis:

In this indicator, Shopify will mark the status of each transaction for you to refer. There are three different colors as green, red, grey illustrating the credibility of each order. When you arrive in the Order page, please press the Fraud Analysis link to review all transactions one by one.

  • Green icons indicating that the transaction can be safe for your business.
  • Red icons illustrating that the transaction is a potential fraudulent.
  • Gray icons means that you should evaluate more on this transaction.

Although the color indicators don’t affirm specifically the order containing fraudulent activities, it can refer to these indicators to avoid fraudulence.

View the fraud recommendation:

If you utilize the Shopify payments of paid plan, you will immediately receive fraud indicators and fraud commendations for each order.

Shopify fraud analysis

These indicators illustrated the risk of order’s chargeback in each transaction. It is divided into different milestones from low to high. Besides that, on the Product page you can, you can easily observe the flag for medium and high-risk orders. All of these indicators assist store owners to consider on Should they do this order?

These indicators are developed based on the Shopify Algorithm to analyse different features relating to a transaction. It contains the historical data from the transaction in different stores. Because of that, Shopify analysis easily detects the sign of fraudulent activities. Moreover, the information will be updated continuously to ensure the credibility of their indicators. 

Analyze third-party app recommendation:

If the store owners install a third-party fraud app on their Shopify store, indicators and recommendations of it will be displayed under the Shopify Fraud Analysis section.

Shopify and High-risk transactions:

Although the fraud analysis on Shopify seems to be very strict, sometimes they miss fraudulent activities. And Shopify store owners have to pay a large amount of chargeback. With a view to reducing the risk for users, Shopify security team tries to develop advanced algorithms to mark high-risk transactions. When a transaction is marked as “Protected”, Shopify is responsible for any dispute chargeback process occurring in these transactions.

Yet, this advanced algorithm takes a long time to complete and operate smoothly. Before that, you have to find out an efficient way to protect yourself. Furthermore, Shopify introduces a list of eight common chargeback reason codes. It will help Shopify store owners to boost the chance of their winning in chargeback disputes.


Customers will ask for fraud chargeback if their cards are stolen, lost or purchased without their permission. 

In this case, you have to display the proof of delivery. It can be the sign for delivery confirmation as well as the identification of people receiving the order. The more evidence you can submit, the more chance for you to win. 

Unrecognized Purchase:

If customers find some issues in their billing statement with the seller descriptor, they can ask for a chargeback dispute.

In this case, you have to ensure that your company descriptor in the card statement is clear. Besides that, you should provide customers with order confirmation and emails to prove the transaction. It will help you to prevent this type of dispute.

Duplicate Purchase:

In general, when customers find out they paid twice for one order, they also request for a dispute. 

Thus, for store owners, if you discover this problem, you have to refund the customer immediately. Besides that, you have to inform customers about these mistakes.

Recurring Subscriptions:

Customers sometimes forget that they sign up for recurring subscriptions. Or sometimes they think that they cancel the order until the next cycle of services.

In order to reduce financial damage, store owners have to hand in their policy on cancelling the order. In particular, it has to be agreed by both companies and customers. Additionally, if possible, you should provide evidence that customers still access your service. 

Products not Received:

If customers will not receive the good that they pay for, they definitely request for a dispute.

In this case, you have to show the evidence relating to the delivery process. It can be tracking numbers, shipping addresses, proof of delivery. In order to reduce these problems, you update customers about delivery progress via Email.

Product is Unacceptable:  

Customers can request for chargeback disputes when the product is damaged or not the same as their order. 

In this case, you have to submit the picture of the goods before packaging to ensure that it’s correct. Besides that, you must provide the picture of packaging to indicate that you package it in a careful way.

Credit not issued:

Sometimes customers want to return or cancel the order yet the merchants do not accept. Doubtlessly, customers will ask for a chargeback dispute.

In order to win the dispute, you have to show your policy relating to return and cancellation. Please remember that it has to be agreed by both customers and you if you state that customers cannot return or cancel the order.


It is a catch-all category for chargebacks not relating to any specific reason code.

In this case, if you want to win the dispute, you have to research carefully on the reason. It enables you to find out your beneficial evidence.

To conclude:

Here is a big picture of Shopify fraud analysis for you to protect your business. I hope it will be useful for you to reduce your financial and reputational damage because of chargeback disputes. 

Please remember ArrowHiTech always offers a wide range of excellent Shopify themes and apps.

If you have any problem in setting up your online store from scratch, do not hesitate to meet ArrowHitech. Our 12-year experience staff in Shopify development and outsourcing will help you set up your dream online store.

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