As ecommerce continues to grow, so do the sophisticated tactics fraudsters use to exploit online retailers. Understanding these common fraud strategies is the first step in protecting your business from significant operational losses. In this guide, we'll break down four prevalent fraud tactics and show you how to recognize them before they impact your bottom line.

Fake Tracking ID (FTID)

The Fake Tracking ID scheme is one of the more technical fraud methods that exploits the return process. Here's how it works: a fraudster orders a product with full intention of keeping it while also getting their money back. When they initiate a return, they manipulate the return shipping label to create a tracking number that appears legitimate in your system but actually routes the package to an incorrect address or causes it to get stuck in transit indefinitely.

Your system shows a "return in progress" status, and you may even see carrier scans that make everything look normal. But the product never actually arrives back at your warehouse. The fraudster has essentially created a phantom return that satisfies the technical requirements of your return policy without ever giving up the merchandise.

Recognizing FTID fraud requires attention to patterns in your return data. Watch for returns that show prolonged transit times with no delivery confirmation, or tracking numbers that stop updating after the initial acceptance scan. If you notice multiple returns from the same customer following similar tracking patterns, that's a significant red flag. Pay special attention to returns routing to unexpected carrier facilities or addresses that don't match your warehouse locations.

One of your strongest defenses is requiring customers to use only pre-paid return labels that you generate and control. Monitor return tracking closely, implement reasonable time limits for return transit periods, and always verify that return addresses match your actual warehouse locations. If a return sits in "transit" status for longer than typical shipping times, investigate immediately rather than waiting for it to resolve itself.

Did Not Arrive (DNA)

This is perhaps the most straightforward and common fraud tactic in ecommerce. A customer places an order, receives it at their doorstep, brings it inside, and then contacts you claiming they never received it. They file chargebacks or request refunds while keeping the merchandise they've already obtained.

The simplicity of DNA fraud makes it appealing to fraudsters, but that same simplicity also makes it detectable if you know what to look for. The classic sign is when a customer claims non-delivery despite your carrier showing successful delivery. While package theft is a real problem and legitimate customers do sometimes fall victim to porch pirates, fraudulent DNA claims follow recognizable patterns.

Be alert when you see multiple DNA claims from the same address or customer, especially when high-value items are consistently targeted. Claims filed immediately or very quickly after delivery confirmation should raise suspicion—legitimate customers usually take some time to realize a package is missing. If a customer has a history of DNA claims across multiple merchants (which you can sometimes detect through fraud networks or shared data), you're likely dealing with a serial fraudster.

Delivery addresses that turn out to be mail forwarding services or freight forwarders also present elevated risk for DNA fraud. These services add layers between you and the actual recipient, making it harder to verify legitimate delivery.

Your strongest protection comes from requiring signature confirmation for high-value orders and using delivery photo confirmation services. These create irrefutable evidence of delivery. Maintain detailed delivery records including GPS coordinates when available, and don't hesitate to flag customers with previous DNA claims in your system. Address verification services can help you identify risky delivery locations before you even ship.

Partially Empty Box/Empty Box (PEB/EB)

This fraud tactic involves customers claiming they received a package that was empty or missing items, despite your warehouse including everything at the time of shipment. The fraudster keeps the products while demanding refunds or replacements, often claiming the box was damaged or had been opened and resealed during transit.

What makes PEB/EB fraud particularly insidious is that it preys on the uncertainty inherent in the shipping process. Packages do sometimes get damaged, and items occasionally go missing during fulfillment. But fraudsters exploit this gray area by making claims that are difficult to disprove without proper documentation.

Pattern recognition is crucial for identifying this type of fraud. Watch for claims of missing high-value items while low-value items in the same shipment were supposedly "received"—this selectivity is a telltale sign. When customers report that boxes were damaged or resealed, but the carrier has no record of damage, suspicion is warranted. Multiple claims from the same customer or address should immediately trigger a deeper investigation.

Some fraudsters have become sophisticated enough to create video "unboxing" content showing empty packages. While video evidence might seem compelling, staged or edited videos can be identified by watching for inconsistencies like broken seals that appear intact in early frames, missing package weight labels, or cuts in the footage.

Your best defense is documentation at the point of packing. Photograph and weigh all packages before shipping, particularly for high-value orders. Use tamper-evident packaging and sealing methods that make it obvious if a package has been opened. Include weight verification in your shipping documentation, and for expensive items, consider video recording the packing process from start to finish. When a claim comes in, compare the carrier-recorded package weight with your records—if they match, the package wasn't empty when it left the carrier's possession.

Lost in Transit (LIT)

Lost in Transit fraud occurs when customers claim packages were lost during shipping and pressure you for immediate refunds or replacements, even though tracking shows delivery or the package is progressing normally through the shipping network. Unlike legitimate lost package situations, LIT fraud involves fabricated urgency and false claims about shipping status.

Fraudsters using this tactic rely on creating pressure and confusion. They'll contact you claiming a package is lost while tracking clearly shows it's in transit within normal timeframes. They may reference vague "carrier problems" or insist they've contacted the shipping company when they haven't. The goal is to make you issue a refund or send a replacement before the original package is actually delivered, allowing them to keep both.

The key indicators of LIT fraud include claims filed prematurely before the carrier's guaranteed delivery window has even passed. Legitimate customers concerned about a potentially lost package are usually willing to wait for carrier investigation results, while fraudsters refuse to wait and immediately pressure you for resolution. Be especially cautious if a customer has multiple LIT claims in their history.

Sometimes LIT fraud overlaps with DNA fraud—the package tracking eventually shows delivery, but the customer maintains their claim that it never arrived or was "lost." This hybrid approach aims to create enough confusion that you'll simply issue a refund to resolve the situation.

Protect yourself by establishing clear policies about when packages are considered lost—typically only after the carrier's guaranteed delivery date has passed and a carrier investigation has been completed. Always wait for carrier investigation results before issuing refunds for allegedly lost packages. Purchase shipping insurance for high-value items so you're covered if packages genuinely go missing. Track your average delivery times by region to establish baselines, then flag claims that come in prematurely. Maintain detailed communication logs that document customer behavior patterns, particularly excessive urgency or unwillingness to follow standard lost package procedures.

The Power of Data in Detecting Fraud

While understanding these individual fraud tactics is essential, the real breakthrough in fraud prevention comes from analyzing the data patterns behind them. Each fraudulent transaction leaves digital fingerprints, and when you examine enough transactions together, those fingerprints become unmistakable signatures.

Consider how fraud patterns emerge across your transaction data. A single DNA claim from a new customer might be legitimate, but when you analyze that customer's broader behavioral profile—their browsing patterns, device information, email domain, shipping address characteristics, and order timing—a clearer picture emerges. Perhaps they're using a new email account created just days before their order. Maybe their IP address doesn't match their shipping location, or their device fingerprint matches other accounts that have previously filed claims. Individually, none of these signals definitively proves fraud, but collectively they create a risk profile that demands closer scrutiny.

The same principle applies across customers. When you aggregate your fraud data, you start to see geographic patterns—certain addresses or regions that generate disproportionate claims. You notice velocity patterns, where multiple accounts place orders shipping to the same address within a short timeframe. You identify product patterns, discovering which items are most frequently targeted by specific fraud tactics. This bird's-eye view of your transaction data reveals trends that are invisible when examining orders one at a time.

Modern fraud detection relies heavily on understanding these patterns at scale. Machine learning algorithms can process thousands of data points per transaction, comparing each new order against historical patterns of both legitimate purchases and confirmed fraud. These systems learn that legitimate customers from Madrid typically place orders during evening hours, use email providers matching their geographic region, and have consistent browsing patterns before checkout. When an order deviates significantly from these norms—say, a new account from Madrid placing a high-value order at 3 AM using a VPN and rushing through checkout—the system flags it for review.

The sophistication of data-driven fraud detection extends to cross-referencing information across multiple sources. Is the email address associated with previous fraud reports across a network of merchants? Does the shipping address match known freight forwarding services? Has the phone number been flagged by other retailers? Is the device being used linked to multiple accounts with suspicious activity? This network effect makes fraud detection exponentially more powerful than any single merchant could achieve in isolation.

Time-series analysis reveals another crucial dimension of fraud patterns. Fraudsters often operate in waves—hitting multiple merchants with the same tactic over a short period before moving on to a new approach. By tracking the timing and evolution of fraud attempts, you can anticipate new threats before they significantly impact your business. If DNA claims suddenly spike for a particular product category or shipping region, that early warning allows you to implement additional verification measures before losses mount.

The most effective fraud prevention systems also learn from their mistakes. Every false positive—a legitimate order incorrectly flagged as fraud—and every false negative—a fraudulent order that slipped through—becomes training data that refines the detection model. Over time, these systems become increasingly accurate, reducing both fraud losses and the friction experienced by legitimate customers.

But data-driven fraud detection isn't just about blocking bad orders. It's equally about confidently approving good ones. When you understand the patterns of legitimate customer behavior, you can streamline the checkout experience for those customers while reserving additional verification steps for truly risky transactions. This balanced approach protects your revenue from both fraud losses and missed sales from customers who abandon carts when faced with excessive friction.

The challenge for most merchants is that building this level of sophisticated data analysis requires significant resources—data scientists, machine learning engineers, constantly updated fraud intelligence, and the infrastructure to process transactions in real-time. It requires access to broader fraud networks and industry data that individual merchants simply don't possess. This is where specialized fraud detection solutions become not just helpful, but essential.

Taking the Next Step in Fraud Prevention

If you've recognized any of these fraud patterns in your own transaction data, or if you're experiencing operational losses but struggling to identify the root cause, you're not alone. Fraud prevention is complex, evolving, and increasingly difficult to manage with traditional rule-based systems or manual review processes.

At Guzco, we specialize in helping merchants like you understand and prevent these exact fraud scenarios. Our platform leverages advanced data analytics and machine learning to identify fraudulent patterns before they impact your bottom line, while ensuring your legitimate customers enjoy a frictionless experience. We've analyzed millions of transactions across diverse retail categories, giving us unique insight into how fraud tactics evolve and how to stop them effectively.

Whether you're dealing with persistent DNA claims, suspicious return patterns, or simply want to understand your fraud exposure better, we'd welcome the opportunity to discuss your specific situation. Our team can provide a confidential assessment of your current fraud landscape and share how data-driven detection could strengthen your defenses while improving your customer experience.

Ready to have a conversation about protecting your business? Connect with us at Guzco to learn more about modern fraud detection strategies tailored to your business needs. Sometimes a single conversation can illuminate patterns you've been missing and unlock solutions that dramatically reduce your fraud losses.

Reach out directly to schedule a consultation. Let's turn your transaction data into your strongest defense against fraud.