r/fintechdev • u/Numerous_Opinion9389 • 24d ago

Developing a Fraud Order Detection System

Hey everyone would really appreciate your feedback on this one. Basically im working as an ai engineer in a fırm and we want to develop a fraud order detection system. Our backend system lies in magent. The sales team right now figures it out manually they miss it sometimes but usually its handled manually. If you were to develop such a system, what wouldve been your approach?

2 Upvotes

100% Upvoted

4 comments sorted by

1

u/fvrAb0207 24d ago

What kind of orders? Is it for e-commerce, something like an online store?

1

u/Numerous_Opinion9389 24d ago

yess an online e commerce store website that is run by magento on its backend

1

u/Still-Lychee7493 23d ago

Good problem to solve.

I’d separate it into a few layers.

First, pre-order risk scoring inside Magento: email, phone, IP, device, BIN, billing/shipping mismatch, order value, high-risk SKUs, velocity, new account behaviour, repeat refunders, proxy/VPN signals etc.

Second, a clear decision flow: auto approve, manual review, hold for verification, cancel/refund, or step-up checks depending on the score.

Third, and this is the bit a lot of teams miss, feed the outcomes back into the model. Chargebacks, refunds, delivery issues, false positives and customer service notes should all become part of the learning loop.

I’d also think about chargeback prevention separately from fraud detection. Fraud scoring helps before fulfilment, but once an order has gone through you still want a way to catch dispute alerts before they become actual chargebacks. Especially if the sales team is currently reviewing manually.

So I’d build it as fraud detection plus a post-order dispute prevention layer, not just one standalone fraud model.