Shopify Protecting Millions of Merchants From Fraud

Image of merchant looking at fraud on computer

The ecommerce world has seen a sharp increase in online sales – a welcome change for most business owners. The increase in fraud that is accompanying these sales is less welcome. 

In 2023, the total cost of ecommerce fraud will exceed >$48 billion globally, up from $41 billion in 2023. That’s a 17% increase year over year.

Of course, there are strategies businesses can implement to help >minimize the impact of online fraud, including using a service to cover fraud-based chargebacks and reducing risk tolerance during peak shopping seasons. Luckily, as a Shopify merchant, you already have Shopify Fraud Control at your disposal.

Shopify is committed to providing merchants with a myriad of industry-leading products that help predict, detect, and manage fraud with a myriad of industry-leading products, including machine learning, custom rules, chargeback protection, dispute management and more – for free.

The power of Shopify’s machine learning technology

Preventing ecommerce fraud from occurring starts with identifying fraudulent purchases before they cost your business money. 

Shopify’s machine learning technology is a best-in-class solution for predicting and flagging fraud across its network and informing merchants of potentially fraudulent transactions.

“Trained on billions of transactions, our supervised machine learning accurately and timely identifies fraudulent activity across millions of trusted merchants. Say goodbye to the hassle and uncertainty of fraud and fulfill a staggering 99.7% orders safely, “ says Aswathy Vasudevan, senior data science manager for Payments and Risk at Shopify.

To provide accurate and real-time insights on every order, we’ve trained over 10 billion transactions across millions of merchants. With the strength of the machine learning algorithm, we make it safer for merchants to accept payments, in addition to spotting patterns earlier than smaller networks. 

Our model is an adaptive machine learning system, meaning it evaluates the risk level for each payment in real time. Shopify helps merchants identify which orders are safe to fulfill by providing a risk level and insights on the order – reducing uncertainty about if the transaction is safe to process. 

Here’s how it works:

  • We aggregate relevant data collected during the checkout process to predict the likelihood of fraud. This is also used to improve the machine learning model over time. 
  • We leverage signals including country, IP address, customer behavioral patterns, payment details, and wallet type to give merchants insights that help predict if an order might be fraudulent.
  • Any previous customers and encounters that were flagged as fraudulent help inform future risk assessment.

When you use Shopify Payments, we leverage data and identify patterns all the way from the initial cart to any chargebacks. 

Recent improvements to Shopify’s machine learning model 

The truth is, bad actors will get more and more sophisticated in their attacks. So in order to stay one step ahead, Shopify continues to invest in innovative and industry-leading solutions to proactively detect and prevent anomalous activity on Shopify-powered merchants. 

As of early 2023, Shopify implemented new signals to effectively distinguish between good buyers and fraudsters, and we continue to refresh the machine learning algorithm to keep it up to date on new fraud patterns. This is the power of the platform, we have access to signals no other providers do. 

As ecommerce sales are rising, it is more important than ever to protect our merchants from fraud like card enumeration attacks. With this type of attack fraudsters typically use bots to submit invalid payments. This trend has been on the rise since the onset of COVID, when more and more businesses moved online.

In late 2022, our team of fraud and data scientists recognized a pattern of these card enumeration attacks across our stores. At its worst, bad actors were automating as many as a million card enumeration attempts per week.

In response, we worked closely with the card networks and our impacted merchants to implement industry-leading countermeasures that proactively identify and prevent card enumeration attacks, leveraging real-time data aggregation and insights. 

Shopify’s interventions have helped to stop more than 20 million fraudulent authorizations. Even better, our security deters fraudsters from targeting Shopify merchants in the first place. 

And while reducing fraud, we haven’t sacrificed legitimate traffic to merchant’s stores – so you don’t have to worry about lost revenue.

“At Shopify, we understand the critical importance of trust and safety in ecommerce. We are proud to offer a suite of fraud products that help our merchants protect themselves against the ever-evolving threat of fraud. Our commitment to providing best-in-class tools and technology means our merchants can focus on growing their businesses with confidence, knowing they have a powerful ally in the fight against fraud,” says Kosar Jaff, vice president of engineering, Commerce Trust and Integrity.

Providing merchants with industry leading fraud features

Beyond our machine learning algorithm, Shopify is committed to building out comprehensive fraud infrastructure across our products, supporting merchants of all sizes.

Fraud is expensive and difficult to combat, as sophisticated fraudsters are constantly finding new ways to exploit weakness. But our wide-ranging fraud features help protect you for no extra cost.

Shopify Payments provides:

  • Machine learning-powered fraud analysis 
  • Proxy detection
  • Custom rules
  • Allow and block lists
  • 3D Secure payment authentication
  • Dispute management
  • And much more!

Additionally, in 2022, we announced we’d begin >protecting chargebacks on Shop Pay for free. We’ve protected over $13 billion in gross merchandise value (GMV) on behalf of our merchants.

Shopify Payments reduces your chargebacks

With Shopify Payments, merchants receive automated dispute management. That means if you receive a chargeback, we’ll respond on your behalf with pre-populated information. 

When merchants use Shopify Payments, Shopify Shipping and our Automated Dispute Response system they are able to boost their win rate of product not received chargebacks by 18%. That saves you money on both the order and the chargeback fee.

Protect fraud while maximizing revenue

Filtering out fraudulent purchases is always a good thing, but you might worry that you’ll sacrifice some purchase volume in the process. That’s not the case with Shopify products. 

Shopify focuses on blocking fraudulent buyers, not good ones. As much as we aim to accurately detect fraud, it is important that we allow our merchants to maximize revenue from good buyers. 

In 2022, our merchants benefited from a 99.7% approval rate, meaning Shopify was able to accurately detect fraud while still enabling merchants to maximize revenue. 

For instance,Mignonne Gavigan transitioned to Shopify Payments to help reduce chargeback volume.

“With our previous payment provider, we consistently experienced fraud. This led us to switch to Shopify Payments. And since then, fraud hasn't been an issue! Everything is 100x better. It's cleaner, easier, and more automated,” says Jade Sperling, vice president, Growth and Analytics.

Previously, Mignonne Gavigan was using a third-party payments provider and experiencing a high volume of chargebacks. Since moving to Shopify Payments, the merchant now has a 99.9% approval rate on orders and a chargeback rate of only 0.05%.

Announcing new features

If all this wasn’t enough, Shopify is excited to share that we plan to continue to invest in building out our fraud protection offerings. We’re excited to share that we’ve launched new features includingg new analytics, and rules-based flows.


New features include: 
  • Dashboard. Our new dashboard will provide more tools for merchants to manage fraud in Shopify. You’ll have access to analytics and rules powered by Shopify Flow
  • Analytics. Shopify merchants will be able to access a comprehensive view of analytics of fraud in their store. This will cover order risk, authorization rates, chargebacks, and more – helping you to keep an eye on trends and make better decisions on your orders.
  • Rules. New rules allow you to automate how you manage fraud. Shopify Flow gives merchants the ability to control which orders you want to blow, allow, or review with custom rules.

Get started.

To learn more about Shopify's fraud features, visit