Behind the Scenes: High Risk Shipping Addresses

Just like good customers, fraudsters must provide a shipping address in order to receive merchandise. But fraudsters’ need to evade detection and efficiently resell stolen goods leaves a trace in the shipping addresses they use. The minFraud network collects data on shipping addresses and uses it to identify any high risk shipping addresses associated with the transactions you submit for minFraud review.

This blog post investigates some high risk shipping addresses known to MaxMind, as well as provides some general fraud review tips for identifying them.

Where are the most high risk shipping addresses?

Let’s take a look at the current top ten zip codes with the most high risk shipping addresses, as identified by minFraud’s shipForward * data point, and see what insight they provide.

As indicated on this map, all top ten zip codes are on the coast and near a shipping port:

Six of the ten zip codes are in Miami, FL. In fact, 75% of the high risk shipping addresses associated with these ten zip codes were in Miami, FL.

The location of these zip codes suggests that many of these high risk shipping addresses are associated with freight forwarders. Freight forwarders are in a position to receive multiple shipments, consolidate them, and ship them to other countries. Of course, much freight forwarding represents legitimate traffic, goods moving from manufacturer to market. But in many cases, freight forwarders provide a convenient service for fraudsters moving stolen goods out of the country.

Zooming in on a map, we can see that there are indeed a large number of freight forwarders in the neighborhood of the risky Miami zip codes:

Freight forwarders Miami

Tips for identifying high risk shipping addresses

Shipping addresses associated with a freight forwarder often include an apartment number or suite number consisting of five or more digits. This provides the freight forwarder with necessary account information while presenting to the merchant as something that appears to be a normal residential address. As a result, we recommend you include apartment and suite numbers in the data you submit with your minFraud Insights queries, as it adds to the data for consideration in shipping address risk assessment.

Since a shipping address associated with a freight forwarder in and of itself is not indicative of high risk, consider other factors:

  • What are the billing and IP addresses associated with the order? As an example, it makes sense that an order placed in the USA but originating from Mexico might use a freight forwarder in the US to reach a final Mexican destination. On the other hand, it may be less obvious why a large order placed from Wisconsin is being shipped to a freight forwarder.
  • What items are included in the order? Does the order include higher risk items, for example, electronics or luxury goods?
  • What is the velocity around the shipping address? A large number of orders to the same shipping address may warrant additional scrutiny.
  • What delivery speed is associated with the order? Those paying with a stolen credit card can afford overnight shipping. Fraudsters are looking to have the goods in hand as soon as possible and prior to the credit card being reported as stolen.

    Consider the cost of the delivery option in comparison to the cost of the item. If the cost of delivery is more than 50% of the purchase price, the likelihood of fraud is higher.
  • Once an order has been placed, watch out for changes in shipping address or delivery type. Fraudsters have learned that merchants give extra scrutiny to orders placed to high risk shipping addresses or with overnight delivery. To remain under the radar, fraudsters may place an order and then follow up with customer service to change a shipping address or delivery option. Train your support representatives to keep an eye out for changes to orders which may reflect fraudulent activity.

The shipping address associated with an order provides clues to the risk associated with a transaction. Leverage the data of the minFraud network to identify high risk addresses, stop shipments to fraudsters, and prevent chargebacks.

* The equivalent data point in minFraud Insights is shipping_address/is_high_risk.