Direct answer: Before you publish your Shopify store, enable the built‑in fraud analysis (available on Advanced and Plus plans) and, if you’re on a lower plan or need extra features, install a reputable third‑party fraud‑prevention app. Verify the app’s pricing, required permissions, and test the settings with a few dummy orders.
Why you need fraud protection before you launch
Even a brand‑new store can attract fraudulent shoppers. A single chargeback can cost you the transaction amount, a processing fee, and potentially raise your account’s risk level. Setting up protection early avoids the scramble of retrofitting rules after you’ve already taken orders.
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- Financial risk: Chargebacks typically cost 2‑3% of the order value plus a fixed fee.
- Account health: Repeated fraud can lead Shopify to suspend payment processing.
- Customer trust: Blocking obvious fraud protects genuine buyers from delayed shipments.
Built‑in Shopify fraud analysis – what it offers and when it’s available
Shopify includes a basic fraud analysis tool that flags orders with a risk score (Low, Medium, High). The feature is automatically enabled on the Advanced Shopify and Shopify Plus plans. It evaluates:
- IP address location vs. billing address.
- Velocity of orders from the same card.
- Known high‑risk email domains.
When an order is flagged as High, you can set the order to be held for manual review. The tool itself is free on the qualifying plans, but you still pay the regular transaction fees.
Prerequisites for using the built‑in analysis:
- Subscribe to Advanced Shopify (USD $299/month) or Shopify Plus (custom pricing).
- Enable Fraud analysis in Settings → Payments.
Choosing a third‑party fraud‑prevention app
If you’re on the Basic or Shopify plan, or you need features like automated order cancellation, address verification, or integration with external fraud services, a third‑party app is the way to go.
Key factors to compare:
- Pricing model: Most apps charge a monthly fee (USD $10‑$30) plus a per‑order fee (USD $0.10‑$0.30). Verify if there’s a free tier for low volume.
- Feature set: Look for AVS (Address Verification System), CVV checks, device fingerprinting, and automatic order hold.
- Permission scope: Apps need read/write access to orders. Ensure you’re comfortable granting those permissions.
- Support and reviews: Check recent reviews and response times; fraud tools need prompt updates.
Popular choices (as of 2024) include Fraud Filter (Shopify’s own free app with limited rules), Signifyd, and NoFraud. Prices and features can change, so always verify on the Shopify App Store page before installing.
Step‑by‑step pre‑launch decision process
- Determine your plan. If you can afford Advanced Shopify, you get built‑in fraud analysis at no extra cost. Otherwise, budget for a third‑party app.
- Calculate expected monthly orders. Multiply projected orders by the per‑order app fee to see the recurring cost.
- Review app permissions. In the app listing, note required scopes (e.g., read_orders, write_orders). Only grant what you need.
- Set up test orders. Use Shopify’s Bogus Gateway or a real payment gateway in test mode. Place at least three orders that simulate high‑risk patterns (different billing IP, mismatched address).
- Configure rules. For built‑in analysis, enable “Hold orders with High risk”. For apps, follow the app’s wizard to set thresholds.
- Document the workflow. Note who in your team reviews held orders and the SLA (e.g., within 2 hours).
- Monitor the first 30 days. Track false positives vs. blocked fraud. Adjust thresholds if you see too many legitimate orders being held.
Realistic hypothetical example
Scenario: A Pakistani entrepreneur, Aisha, plans to sell handmade accessories to customers in the United States. She expects 120 orders per month, average order value USD $45. She is on the Shopify plan (USD $79/month) and wants to keep monthly costs under USD $150.
Steps Aisha follows:
- She calculates the cost of a third‑party app: Signifyd charges USD $20/month + USD $0.15 per order. For 120 orders, that’s $20 + (120 × $0.15) = $38.
- Total recurring cost = $79 (Shopify plan) + $38 (app) = $117, within her budget.
- She installs the app, grants read_orders, write_orders permissions, and runs three test orders using the Bogus Gateway with mismatched billing addresses.
- The app flags two orders as high risk; she reviews them and cancels the fraudulent one.
- She writes a SOP: “If an order is flagged High, the store manager reviews within 2 hours and either approves or cancels.”
After the first week, Aisha sees 2 % of orders flagged, with no false positives, confirming the setup works.
Common mistakes and how to fix them
- Skipping the test order phase. Without testing, you won’t know if the app correctly blocks risky patterns. Fix: Always place at least three test orders before launch.
- Choosing an app with hidden fees. Some apps charge extra for “advanced rules”. Fix: Review the pricing table and ask the vendor about any add‑ons.
- Relying solely on IP location. Fraudsters can use VPNs. Fix: Combine IP checks with AVS and device fingerprinting.
- Not assigning a reviewer. Orders held indefinitely can lead to lost sales. Fix: Define a clear responsibility and response time.
Pre‑launch fraud‑protection checklist
- Confirm your Shopify plan (Advanced/Plus for built‑in analysis or budget for an app).
- Select a third‑party fraud app if needed; note monthly and per‑order fees.
- Verify app permissions and read the privacy policy.
- Enable fraud analysis in Settings → Payments (built‑in) or configure the app’s dashboard.
- Create at least three test orders with high‑risk characteristics.
- Set up order‑hold rules and document the review process.
- Schedule a 30‑day monitoring period to adjust thresholds.
- Keep a record of all costs for budgeting purposes.
FAQs
Do I need a third‑party app if I’m on the Basic plan?
Shopify’s basic plan does not include the built‑in fraud analysis. While you can manually review orders, most new sellers benefit from an app that automates risk scoring.
Can I use the same fraud app for both Shopify and Amazon FBA?
Most fraud apps are Shopify‑specific because they need access to order data inside Shopify. For Amazon, you’d need Amazon’s own fraud‑prevention tools or a separate service.
Will fraud protection affect checkout speed?
Built‑in analysis runs instantly and does not delay checkout. Some third‑party apps add a brief verification step (usually