How do I prevent cash on delivery fraud?

Cash on delivery is popular with Indian shoppers, but it comes with risk: fake orders, refused deliveries and return-to-origin costs. Cash on delivery fraud and casual “order and forget” behaviour can eat into margins, especially for small stores. The good news is that a few simple controls cut most of the losses.

Here are practical ways to reduce bad COD orders without losing genuine customers.

Common forms of cash on delivery fraud

• Fake names, numbers or addresses.
• Prank or competitor orders.
• Customers who order several items and refuse delivery.
• Repeat refusers who order often but rarely accept.

10 ways to reduce cash on delivery fraud

1. OTP verification of the phone number at checkout.
2. Confirmation call or WhatsApp message for COD orders before dispatch.
3. Order value limits for COD, with prepaid required above the limit.
4. Partial advance on high-value COD orders.
5. Pincode rules that disable COD where refusal rates are high.
6. Customer history checks to block repeat refusers.
7. Prepaid incentives, such as a small discount or free shipping for prepaid orders.
8. COD fee to discourage casual orders.
9. Clear delivery timelines, so customers are not surprised.
10. Courier risk tools that flag likely return orders.

Tools that help

Shipping platforms such as Shiprocket offer tools aimed at reducing returns; check their current features for your plan.

Balance fraud control with conversion

Too many checks can scare away genuine buyers. Start with OTP verification and value limits, measure your refusal rate for a month, then add stricter rules only where the data shows a problem. Removing COD entirely can lower sales in some categories, so test carefully.

Example: halving refused orders

A fashion store saw a high share of COD orders refused at the door. It added OTP checks, limited COD to orders under a set value, offered a small discount for prepaid orders and turned off COD for a handful of pincodes with very high refusal rates. Within two months, refused deliveries fell sharply and the share of prepaid orders rose. Tackling cash on delivery fraud did not reduce total sales; it reduced wasted shipping.

Measure what matters

• COD share of total orders.
• Refusal or return-to-origin rate for COD vs prepaid.
• Cost per refused order, including both shipping legs.

Train your team to spot warning signs

Software catches many problems, but your team can spot others. Share a short list of warning signs: names that look fake, incomplete addresses, many high-value items in a first order, or the same phone number placing several orders. Ask staff to confirm such orders by phone before dispatch. Combined with checkout rules, human checks are one of the most effective ways to reduce cash on delivery fraud without blocking genuine customers. Review the results each month and adjust the rules where cash on delivery fraud is still getting through.