Setting Up Fraud Management Filters

You must set up Fraud Management Filters after you sign up for them.

Configuring Your Fraud Management Filters

Configuring Fraud Management Filters to enable filters that are predictive of fraud requires both experimentation and iteration. By default, Fraud Management filters are not configured to identify potentially fraudulent transactions.

Important: By default, Fraud Management Filters are not configured. You must configure your filters before they take effect.

You configure PayPal Fraud Management Filters to accept as many payments as possible automatically, deny payments that are clearly associated with fraud, and review the payments that are outside your normal experience but may or may not indicate an attempt to defraud.

When you first start, you should consider using filters only to flag payments; in which case, the payment is accepted but you can easily locate and view the payment later. If you notice that a filter configuration is predictive of fraud, you can either change the filter configuration to review the payment or to deny the payment. If you choose to review the payment, you may want to incorporate the review into your normal workflow. If a filter is not predictive of fraud, you can deselect the filter.

To configure Fraud Management Filters, select Fraud Management Filters from your Profile. Then enable the filters you want to use from the Edit My Filter Settings page:

Note: The available filters are determined by agreement between the merchant and PayPal. You may not be granted access to all filters.

Fraud Management Filter Settings

You can configure Fraud Management Filters to accept or deny a payment and to review or flag a transaction.

Setting Description
Accept Accept the payment. This setting is only used by the Total Price Minimum filter, which causes PayPal to accept transactions that fall below a minimum transaction amount, regardless of the setting of any other filter.
Deny Deny the payment. You should only use this setting if you are certain you want the filter to disqualify the payment. For example, you might deny payments from countries for which it is too difficult to conduct business.
Review Pend the payment for your review. Use this setting when you want to evaluate the transaction and make an explicit decision whether to accept or deny the payment.
Flag Accept the payment and flag it for later examination. Use this setting for testing a filter or when you are not sure you want review the payment but want an easy way to locate the payment should you decide to look at it.

Fraud Management Filters Setup Strategy

You enable the Fraud Management Filters that your experience suggests will be most predictive of fraud. By default, Fraud Management Filters are not enabled.

Consider an example in which your experience indicates that orders whose total amount exceed a threshold amount are unusual. It may indicate that the buyer does not really care about the size of the order because the order is not actually legitimate; in this case, it could be an attempt to obtain merchandise by fraud.

Depending on how much you rely upon the belief that a specific transaction characteristics are indicitive of fraud, you specify one of the following actions on the Edit My Filters Settings page:

  • Flag the transaction, in which case the transaction is accepted; however, you can conveniently view the transaction on PayPal later and, if you believe that the transaction might be fraudulent, you can reverse the payment and not ship the requested merchandise.
  • Review the transaction if it exceeds the threshold amount, in which case the transaction is marked as pending. You explicitly accept or deny the payment before deciding whether to ship the requested merchandise. Specifying a review is similar to flagging the payment, except that you must make an explicit decision whether to accept or deny the payment; it is not automatically accepted.
  • Deny the payment. This operation is automatic; however, because the action results in the loss of revenue if the payment is actually legitimate, you should choose this action only after careful consideration.

In the case of the size of the transaction, and with many other filters, can choose a threshold for which the specified action applies; for example, you can flag, review, or deny transactions over a specified amount.

You should set up your Fraud Management Filters so that most transactions pass through your filters and payments are accepted automatically. Your goal is to minimize the risk of a fraudulent transaction against the cost of denying a legitimate payment and to minimize the time required to review transactions.

To meet this goal, you typically experiment with the filters available to you and the actions to take. Before you set up a filter to deny payments or pend transactions for review, you can set the filter to flag the transaction, which allows you to identify the transactions before taking more severe actions. PayPal also provides you with feedback on the operation of each filter.