Why Monitoring Clients Through Watchlist is Essential

We all agree that combating fraud is a challenging task. The key is to identify fraudsters while minimizing inconvenience for legitimate buyers. Distinguishing between a fraudulent user and a genuine customer can be difficult. For example, should you block a user who is browsing with a VPN? Should a new buyer raise a red flag?

There are no definitive answers to these questions. They depend on your customer base and their usage or purchasing patterns. For instance, VPN use may be common in some countries but less so in others. Thus, having an “interim state” between “good” and “bad” customers can aid your decision-making process. This is where the “Watchlist” comes into play.

How’s the Watchlist Works in FraudLabs Pro?

Let’s assume you run an online store selling digital content downloads. One day, you receive an order from a “new buyer” who purchased an item using a VPN. You’re notified because you’ve added a validation rule to alert you if buyers use an anonymous proxy. After carefully reviewing the fraud report, you think this could be a genuine buyer, but you’re not sure. The reason? This user is new and used a VPN for purchasing — something your past data shows buyers rarely do. After careful consideration, you decide to accept the order and put this buyer on your monitoring list, the Watchlist. Below is how you can do so:

However, please note that the above action merely labels this buyer with a Watchlist status, without taking any direct action against them. You want the system to alert you again if a person on the watchlist makes another purchase, allowing you to review their purchasing behavior. To achieve this, you create a new validation rule that puts all orders from watchlisted buyers into review, as shown below

This ensures close monitoring of all watchlisted buyers for any abnormal behavior. For example, fraudsters might continue to make numerous repeated orders if they discover their stolen card can successfully transact. This usually happens within a short period after the first successful order, allowing them to maximize profit before you or the payment gateway uncover their scheme. Since you’ve already flagged these orders for review and captured the payments, you can safely reject them and blacklist the buyer. This strategy will protect you from significant fraud losses.

Conclusion

Is a watchlist essential? Absolutely. The scenario above is just one way you can apply the watchlist state, and there are many strategies you can adopt to protect your online site from malicious fraudsters. If you wish to learn more details, you may visit the article “What is IP Watchlist?”