While it's true that fraudsters use reshippers to try and cover their tracks, many legitimate customers also rely on these services. Merchants utilizing blacklists or rules-based fraud management systems are most probably unwittingly declining legitimate orders sent to reshippers.
The global B2C cross-border eCommerce market was worth $230 billion last year, and is predicted to grow significantly hitting $1 trillion by 2020. Reshipping companies, which accept a package on the customer’s behalf and then forward the parcel to its final destination, play a central role in enabling cross-border eCommerce. This is especially true in emerging markets, which are projected to experience the strongest growth.
Online retailers generally consider reshipping companies, also known as parcel forwarding centers, freight forwarders, and reshippers, as a fraud indicator. This is because similarly to proxy servers, consumers can use reshipping services to conceal their real location. The fact that risk scoring services will often trigger fraud alerts on orders shipping to reshipping companies also contributes to their negative reputation.
While it’s true that fraudsters use reshippers to try and cover their tracks, many legitimate customers also rely on these services. Merchants utilizing blacklists or rules-based fraud management systems are most probably unwittingly declining legitimate orders sent to reshippers. Whether you already sell globally or plan to start accepting non-domestic orders, it’s important to ensure you are well-equipped to accurately review international orders for fraud. In this article, we lay out the legitimate reasons for using reshippers and provide tips for distinguishing between the good and fraudulent orders.
Why Legitimate Customers Use Package Forwarding Services
At Riskified, we approve over 92% of cross-border transactions where the shipping address is a reshipping company. Since we cover all approved orders with a full chargeback guarantee, you can be sure we are fairly certain these are legitimate transactions. So why do we approve these orders? Parcel forwarding services enable consumers to buy from stores that don’t ship to their country and to avoid high shipping costs. No matter where you are based, unless you offer free shipping worldwide, you should expect to see some of your international customers use package forwarding services.
Step 1: How to Identify a Reshipper and Why This Is Crucial
International orders will often have more data mismatches than domestic orders. For instance, it’s very common to see a shipping address that is different than the billing address in cross-border transactions. If you process a transaction without knowing that the address and/or the phone number provided by the customer belong to a package forwarding service, it will be very hard to make sense of the mismatches.
In addition, because reshippers provide a service to a wide audience, if you’re utilizing any order linking technology, you will likely see many unrelated customers using different payment methods but shipping to the same address. Such high velocity is bound to raise many red flags, especially if some of the orders previously shipped to the address returned as chargebacks. In fact, the key to potentially approving the order is to identify that you’re dealing with a reshipper.
So How Can You Tell Whether a Certain Address Belongs to a Reshipping Company?
- Look at the address:
We just mentioned the first indicator. If you have any linking technology in place, you will sometimes see many unrelated legitimate customers using the same shipping address. This is a strong indication of a reshipping service. If linking data isn’t available, the shipping address itself might clue you in. Reshipper addresses tend to include many letters and numbers. The number and letter sequence included in the address is the package identifier, which the end-customer can use to track the package delivery status.
Below is an example of a classic reshipper address:
- Look at the address:
- Ask Google:
A simple online search may suffice to validate your suspicions that the address or phone number provided in the order belong to a package forwarding center. Reshippers often describe themselves as international shipping services, cargo or freight forwarders, or package shippers. Don’t be concerned if the word “scam” pops up in the search results – this may be a warning left by a merchant who once incurred a chargeback for an order shipped via this reshipper – and doesn’t necessarily reflect on all other customers of the package forwarding service.
What to Do Once You’ve Managed to Identify a Reshipper
Once you have verified that you’re dealing with a reshipping center – a best practice we highly recommend is tagging that information within your system, so that any time this same address appears in order details going forward, you will see a “reshipper” notification or tag. This will eliminate the need to search the address the next time round, and will allow you to immediately identify that you are dealing with a reshipping service.
Just because you’ve identified that the package is sent to a reshipper doesn’t mean you shouldn’t be able to figure out the order’s final destination! Many package forwarding services ship only to specific countries or regions – such as Russia, East Asia, or South America. This information will appear on the reshipper’s website and can help you ascertain what the order’s final destination might be. Another way to identify the final shipping country is to take a closer look at the package identifier included in the shipping address. The letters included in the package id are often abbreviations of the destination country. For example, in the example reshipper address above, the URU within “URU59032” indicates that the item’s final destination is Uruguay.
Identifying the destination country will help you figure out whether the “good” purchase story makes sense. Does the customer’s identity match the destination country? Do the IP address and BIN country match the region to which the package is being shipped?
What to Do If You Can’t Verify It’s a Reshipper
If you fail to find any indication that the shipping address or phone number belong to a reshipper, you may be dealing with one of the following types of B2B customers:
- Businesses that purchase your goods in order to sell them to a third party –
This includes professional buyers and companies that import goods for resale. For example, international online purchasing services such as this Nigerian company.
- Businesses that purchase your goods in order to sell them to a third party –
- Businesses that purchase your goods for their own needs –
These include film production and TV studios, model agencies, and university labs. In these cases you will usually be able to see whether the purchase makes sense. For example, while it makes sense for a model agency to order high-end fashion items, it’s not clear why a university would make that purchase.
Step 2: Determining Whether The Order Is Legitimate
Rather than making decisions based on specific data points, the approach that allows Riskified to make accurate decisions is taking all the information available for every order into consideration. Using this information, we try to tell a “good story”, of a legitimate customer, and a “bad story”, of a fraudster, and weigh these stories against each other. Does the “bad story” make sense in this scenario? What best explains all the data points you have?
Similarly, there is no single data point that will reveal whether a transaction involving a reshipper is legitimate or fraudulent. Rather, the key is figuring out if there is a logical reason for the customer to use a reshipping service.
Negative Patterns to Watch out for
- Use of reshipper within the same country:
Think about it, why would someone use a domestic reshipping service rather than ship directly? If the credit card used to place the order was issued in the same country as the shipping address, this may be fraudulent reshipper use. At Riskified, we identify nearly 60% of all orders with a US credit card shipping to a US reshipping center as fraud attempts.
- Proxy usage, new email address, lack of online identity:
If a customer not only ships to a reshipping center but also uses a proxy, they may be trying to disguise their location. If the order is placed using a brand new email address and you cannot find any digital “fingerprints” of the customer online – they may be deliberately trying to withhold their true identity.
Positive Indicators to Look For
- International IP address matches credit card country:
As explained above, there are many legitimate reasons for using international or cross-border reshippers. If you can identify the customer’s IP address and confirm that it matches the country where the credit card was issued – that’s a good sign. It helps validate the “good purchase story”.
- No proxy usage, old email address, strong online identity:
The vast majority of fraudsters are concerned about getting caught and take various steps in an attempt to cover their tracks. Any details that expose the customer’s true location or identity – such as a “clean” IP address and an email address that’s been in use for several years and is linked to a person by the same name – are a positive indication.
Our Take On Reshippers
Reshipping services are commonly used across the globe – by fraudsters and legitimate customers alike. The trick is to identify the legitimate use cases and to avoid inadvertently turning away good customers. If you sell internationally, we strongly recommend against using blacklists, as they will not allow you to distinguish the good orders from the fraudulent ones. Once a reshipper is added to your blacklist, you will blindly reject all transactions shipping to the package forwarding center.
At Riskified, we see legitimate orders shipping to package forwarding centers every day. We know that some of our US merchants have a large customer base in the Caribbean, while others are popular in East Asia and in Africa. If you start examining your international orders more closely, you will soon start identifying the markets where reshippers are commonly used by good customers.
Have any questions about reshippers or about reviewing cross-border orders for fraud? contact us.