Prevent Ecommerce Fraud and Win Chargebacks: Shopify Risk Settings, AVS/CVV and Velocity Rules, Manual Review Playbooks, and Dispute Response Templates

Fraud drains revenue and time from growing ecommerce brands. The latest LexisNexis True Cost of Fraud report shows that merchants in the U.S. and Canada lose an average of 3 dollars for every 1 dollar of fraud when you add fees, operational costs, and lost goods. According to the LexisNexis press release, 60 percent of ecommerce merchants saw fraud rise year over year, and more than half of losses now originate from digital channels. This guide gives you a practical, Shopify-focused system to prevent fraud, review suspicious orders with confidence, and win disputes when they happen.

Start with the right foundation in Shopify

Shopify bakes risk controls directly into checkout and order management. That means you can stop a large portion of fraud without third-party tools or heavy dev work.

• Shopify’s fraud analysis flags low, medium, or high risk orders and highlights indicators like AVS match, CVV match, IP details, and whether multiple cards were tried on the same order. The Shopify Help Center article on fraud analysis explains how these indicators and recommendations work and where to view them in the order timeline.

• AVS and CVV controls can be configured inside Shopify Payments. As the Shopify Payments configuration guide details, you can enable Decline charges that fail CVV verification and Decline charges that fail AVS postal code verification. Turning these on will prevent an order from being created when checks fail, which reduces downstream chargebacks at the cost of some added checkout friction.

• 3D Secure adds an authentication step for cardholders. Shopify notes on the same configuration page that enabling 3DS can block fraudulent chargebacks on eligible orders by shifting liability to the issuer in many regions.

If you are setting up a new store or revisiting core settings, the walk-throughs in the Ultimate Shopify Set-Up Guide can help you move quickly without missing critical steps. If you are still choosing your platform, you can start a free trial with Shopify to access these controls out of the box.

AVS, CVV, and velocity checks: what to turn on and why

AVS and CVV checks are proven, low-lift ways to filter out obvious fraud. The Shopify documentation explains that AVS compares the numeric parts of the billing address and postal code to the card issuer’s records, while CVV confirms that the buyer has the physical card. When you enable automatic declines for AVS or CVV failures, you stop high-risk attempts before orders are created.

Avoid blanket declines if your audience is heavily international or mobile, since AVS accuracy varies by region and some legitimate shoppers can fail AVS. Shopify’s enterprise team reported that intelligently applying 3DS on high risk transactions increased payment success rates and reduced fraud chargebacks at scale, as described in their post on how Shopify Payments uses machine learning and 3DS.

Velocity checks catch patterns fast. They look for spikes in orders or attempts from the same card, IP, device, or email within a short window. Stripe explains several effective rule patterns in Stripe Radar rules documentation and their guide to Radar rules, including blocking a card used multiple times in one hour and limiting attempts per IP. Even if you do not use Stripe, these patterns describe what “good” velocity logic looks like in any risk stack.

Practical velocity rules to consider in Shopify via native tools and apps:

• Block more than 3 payment attempts from the same IP in 10 minutes.

• Block more than 2 orders from the same card fingerprint in 1 hour.

• Flag if the same email tries 3 distinct cards in 30 minutes.

• Require manual review when order value exceeds your 95th percentile or when the cart includes high resale value items.

If you want automation that triggers based on these patterns, the playbooks in Automate to Dominate show how to use Shopify Flow to auto-tag and route orders for verification without writing code.

A practical manual review playbook for high risk Shopify orders

Manual review should be fast, consistent, and documented. Use this step-by-step checklist to separate good orders from fraud without slowing fulfillment.

1. Verify signals in Shopify

• Review the fraud analysis indicators. As the Shopify Help Center notes, look closely at AVS result, CVV match, IP location, number of card attempts, and mismatches between billing and shipping.

• Check order history. First-time customers placing unusually large orders deserve extra scrutiny, especially for digital goods or high-resale items.

2. Validate identity and intent

• Send a friendly “order confirmation check” email asking the buyer to confirm the shipping address and phone number. Genuine customers tend to respond quickly and clearly.

• For large orders or wholesale quantities, request a short reply from the cardholder’s email and consider a lightweight ID check to verify name matches the cardholder. Tailor requests to be privacy-conscious and proportional to risk.

3. Risky destinations and logistics

• Watch for freight forwarders or known reshippers when selling high-resale goods. If you ship anyway, require signature and add insurance.

• For physical goods above a threshold, use tracked shipping with signature. As PayPal’s Seller Protection and related guidance explain, transactions above 750 dollars typically require signature confirmation to qualify for certain protections.

4. Adjust fulfillment strategy

• Split-ship large orders. Start with a smaller quantity to validate delivery before sending the full amount.

• For made-to-order or backorder items, set clear timelines and send proactive updates to reduce “item not received” disputes. Well-timed email flows from your email marketing program can prevent misunderstandings that escalate into chargebacks.

5. Record everything

• Save all interactions, tracking numbers, delivery confirmations, IP logs, AVS and CVV results, and policy links. The Visa Dispute Management Guidelines for Merchants emphasize that compelling evidence and timely responses are essential to win representments.

If you frequently ship high-value items or need tighter last-mile control, review your options with the fulfillment partner selection guide. A provider that supports robust tracking, delivery photos, and consistent signatures can materially improve dispute outcomes.

Stop disputes before they start with issuer collaboration

Many friendly fraud disputes can be prevented if cardholders receive clear merchant and order details early in the issuer workflow. Tools like Verifi Order Insight and Ethoca Alerts share enriched order data with issuers in real time, which helps cardholders recognize purchases or cancel fraud before it becomes a formal chargeback.

Visa’s Compelling Evidence 3.0 standard also expanded what counts as strong evidence for first party misuse. As Visa’s own CE 3.0 readiness documents explain, merchants can use prior undisputed transactions tied to the same device, address, or account to prove that the current dispute is likely legitimate. See Visa’s Compelling Evidence 3.0 Merchant Readiness to understand the data elements that qualify.

Dispute response templates you can copy, paste, and adapt

Every network has reason codes with specific evidence requirements. The Visa merchant guidelines map required items by reason code. Use these structured templates to reply quickly with complete, organized evidence.

Template 1: Fraudulent transaction (card not present)

• Subject: Dispute response for Order [#12345] — Reason code [X]

• Summary: We believe this dispute is invalid. The transaction passed security checks and was delivered to the cardholder’s address.

• Transaction details: Order number, date, amount, authorization ID, product summary

• Risk checks: AVS result, CVV result, device/IP geolocation, number of attempts

• 3DS: If applicable, state 3DS authentication outcome

• Customer history: Prior undisputed orders, same device or account identifiers if available under CE 3.0 rules

• Fulfillment proof: Carrier, tracking number, delivery date and time, signature confirmation for orders above threshold

• Communications: Screenshots of order confirmation emails, customer replies, and any support interactions

• Policies: Link to clear refund, shipping, and return policies as shown at checkout

• Closing: Based on the above evidence, we request the chargeback be reversed

Template 2: Merchandise not received

• Subject: Dispute response for Order [#12345] — Not Received

• Summary: Item was delivered to the cardholder’s address on [date]

• Fulfillment proof: Tracking page screenshots, delivery scans, GPS delivery confirmation when available, signature confirmation when required

• Attempts to resolve: Customer contact timeline and resolutions offered

• Policies and expectations: Shipping policy link and delivery estimate shown at checkout

• Closing: Delivery is confirmed; we respectfully request reversal

Template 3: Product not as described or defective

• Subject: Dispute response for Order [#12345] — Not as Described

• Summary: Item matched the description and images on the product page

• Evidence: Product page screenshots, variant and specs selected by buyer, unedited product photos, and user manual or usage notes

• Customer communications: Return authorization offered, resolution options provided, timestamps of emails

• Return status: If returned, note condition on receipt and whether refund or exchange was issued according to policy

• Closing: The item matched the description and policy was followed; request reversal

Template 4: Credit not processed

• Subject: Dispute response for Order [#12345] — Credit Not Processed

• Summary: Refund was issued on [date] for [amount]

• Evidence: Screenshot of refund transaction ID in Shopify, bank processor reference, and notification email to customer

• Policy: Return and refund timelines as shown at checkout

• Closing: Credit already processed; request closure in our favor

Two tactical notes to increase win rates:

• Respond fast with complete packages. Issuer and acquirer deadlines are strict and short. The Visa guidelines make clear that missing or partial data leads to automatic losses.

• Maintain a dispute evidence folder template in your drive and a checklist in your help desk. Teams move faster and miss less when evidence gathering is standardized.

KPIs and routines that keep fraud in check

Fraud control is not set-and-forget. Run a simple weekly routine and track:

• Chargeback rate by network and reason code. Keep card network thresholds in mind so you are not flagged for monitoring programs.

• False decline rate. Run test orders and listen to customer support to spot legitimate orders being blocked by overly strict AVS or velocity rules. Shopify’s own analysis suggests smart 3DS use can reduce false declines while still cutting fraud, as their enterprise fraud post describes.

• Order rejection rate by country. As Shopify’s fraud prevention guide notes, international orders tend to see higher rejection rates, so rule tuning by region matters.

• Cost per prevented chargeback. The LexisNexis study reminds us that true fraud costs are a multiple of the transaction value. Invest in controls and tooling that save more than they cost.

When you nail fraud prevention, fulfillment speeds up, CX improves, and your marketing dollars work harder. If you are addressing broader scaling bottlenecks at the same time, this checklist pairs well with our guide to overcoming common scaling challenges and our post on avoiding dropshipping pitfalls, since slow shipping and supplier misses are frequent roots of disputes.

Ready to lock down checkout and reduce costly disputes with a platform that has these tools baked in? Start a free trial of Shopify and enable AVS, CVV, and 3DS in minutes.

If you want to go deeper on growth levers after fraud is under control, explore the rest of the eComAmplify library, from SEO basics to high-converting social ads.