As a business owner, it’s in the best interests of your company to guarantee customer satisfaction and loyalty. You want buyers to not only keep patronizing your goods and services, but to tell their friends about your products. Even though you work hard at building a solid relationship with your audience, you may encounter a scam artist who takes advantage of your good will. Online fraud can impact your sales and revenue and cause you to become suspicious of certain consumers.
Chargeback abuse can take many forms. For example, a thief may make a large online purchase with a stolen credit card and then turn around and return it for a cash refund or gift card. He or she can then purchase another item and sell it for cash. In some cases, the fraudster receives a “double refund” after receiving a refund from the online company and then a chargeback on the credit card.
As an Internet retailer, it’s imperative to have fraud prevention methods in place to protect your business from chargeback abuse. There may be honest customers who have a legitimate issue that necessitates the need for a chargeback, but high rates of return that are questionable can negatively impact your business.
Chargebacks can occur for many reasons, such as customer disputes, processing errors, authorization issues and non-fulfillment of orders. The more proactive you and your staff are about proper merchant procedures, the less likely you’ll be to do something that might result in an unwanted chargeback. And remember that chargebacks are not always the consequence of something merchants did or did not do. Card issuers and cardholders can be just as guilty in making errors.
Chargeback abuse is becoming a reality for many merchants, but for the diligent small business owner, it does not have to affect your bottom line. Take precautions when shipping to international addresses, of large quantity orders and repeated attempts to order on the same card. Fraud prevention measures can help you win the fight against e-commerce fraud.
Here at L3 Payments we all work very hard day in and day out, so when summer rolls around we like to take some time off (not all of us at once, of course) to recharge our batteries and do a bit of traveling. However, one person in our office recently took a trip that makes Bear Grylls look like Justin Bieber.
To give you some context, our underwriter, John Porichis, is known around the office for taking epic vacations each year. In fact, John has visited 6 of the 7 continents, with Antarctica being the only uncharted territory. Now, I’m no expert, but I’m pretty sure you have to be a penguin to go to Antarctica, so I won’t hold it against John if he doesn’t make it there (even though he tells me it’s possible for a human…and he would know!) But for all the cool stuff John has done, I think this latest adventure is the most impressive. John and his wife took a 23 hour journey from California to Tanzania where they spent 6 days climbing Mt.Kilimanjaro! It took 4.5 days to reach the peak at 19,345 feet and another 1.5 days to come down. Listen, I spent 1 night in a tent in my backyard with my son and nearly called it quits at 2:00am because I was uncomfortable and couldn’t sleep, so my brain can’t even begin to comprehend spending 6 days on the highest free-standing mountain in the world in freezing temperatures. So, hats off to John and his wife!
Here are some pictures from John’s amazing trip.
Also newsworthy this month, Melody Lashmar recently posted several informative articles; the most recent titled “Picking the Pockets of Merchants“. Here, Melody provides some interesting insight into how merchants and third-party processors are often the scapegoat when consumers overspend.
Until next time, we hope you enjoy the rest of your summer and please feel free to reach out to us on Facebook, Twitter, our blog, or via email (firstname.lastname@example.org) with any questions or comments. Take care!
By Melody Lashmar – It’s that time of the month again… I get cranky and tired and irritated. I know what you are thinking and I assure you, it’s not hormonal. It’s the result of the monthly roundtable call I participate in where I get updated on many of the ridiculous, and often government funded, attacks on merchants and third-party processors. To be fair, I will agree that not all the actions are ridiculous.
Every month the legal section starts with “WOW, it’s been quite a month”. The utterance of the phrase is almost laughable now in that there are so many “actions” against payment participants on the originating side of the equation that what should be “quite a month” is merely “business as usual”. All these actions seem to be in the name of protecting the forever-innocent consumer and the bank that services them.
Let’s see, this past month consumers were unable to make appropriate decisions Continue reading
In the retail world, con artists have always attempted to outsmart unsuspecting business owners. If they’re shopping in a store, they may swap one price tag for a lower one or purchase expensive merchandise for a special occasion, wear it and then return it, claiming that they had problems with the item.
Whether your business is brick and mortar or your primary profits come from an online boutique, you may be faced with the growing problem of “cyber shoplifting.” This is a phenomenon where swindlers try to con retailers out of merchandise by making purchases and denying they received them or claiming to send back products that the merchant never receives. If you’ve ever been hit with a bogus return, you know what a hassle it is to deal with the banks and fight the fraud.
The anonymity associated with making purchases online means the Internet retailer takes that payment on good faith. In spite of the challenges of cyber shoplifting, you don’t have to sit back and let it happen to your business. There are safeguards you can put into place to prevent fraud and reduce your chargeback rate.
Make sure your ordering process is clear cut. There should be no “surprise” fees, terms or conditions that would anger a customer. Some merchants may not mention a “service fee” until the order goes through, which frustrates the consumer. An angry customer is more likely to process a chargeback than one who is satisfied and feels that they got exactly what was promised. It’s also more challenging for thieves to claim deceptive chargebacks when your order process is explicitly stated on your site.
Documentation is key. Keeping a paper trail of all transactions can also guard against cyber theft. By documenting every step of a transaction (whether on the Internet or in a store), you can protect your business from fraudulent claims because you have the data to back up purchases. If you have a brick and mortar store, verify that the card information matches the customer’s driver’s license and always obtain a signature. A little prevention goes a long way.
Cyber criminals play many games to swindle small business owners. These thieves may make large purchases with stolen credit cards and the Internet retailer is none the wiser until a chargeback occurs. Con artists may also initiate chargebacks for merchandise they received but claimed was lost in the mail. They then resell the purloined product for a profit.
Even though cyber scammers have many tricks up their sleeves to deceive unwitting retailers, some small business owners are catching on to their schemes and choosing to fight back. Don’t let your small business become a sad statistic. In the case of one entrepreneur, he was conned out of an expensive cell phone by a deceitful buyer. The retailer refused to take the crime lying down. He fought back by turning to his social networks. Using an image that he had taken of the thief, he uploaded it online and also posted about the scam. Eventually, the con artist’s personal information was discovered and he was turned over to the authorities.
Anti-fraud measures can help save your small business. For example, always validate the order before it is shipped. You may ask the buyer to scan the front and back of the credit card and email it to you, as well as sending a copy of his or her driver’s license which provides additional proof that the customer is the true credit card holder. If the customer does not know all the information you are asking for, he or she is probably an e-commerce scammer.
As in the case of the phone thief above, you can also call the authorities to report the crime or call the cardholder’s bank and ask him or her to report the crime to the police in the city where the merchandise was shipped. By using these methods, you may be able to recover the stolen product.
Above all, always trust your gut. If the buyer or the transaction seems suspicious, don’t do business with the person. You may save yourself some grief in the long run.
In today’s digital landscape, it becomes necessary for online retailers to accept credit cards if they want to thrive and keep up with their competitors. Providing a way for your customers to pay with plastic shows that you care about their convenience, you’re flexible in your payment options and you stay abreast of the latest technological trends.
The downside of this, however, is that chargeback abuse can occur when credit cards are used. Dishonest consumers may engage in this growing cyber crime to get out of paying for their purchases. This may take the form of using stolen credit cards to pay for products to initiating false chargebacks for merchandise they claim was never received. In one case, also known as “friendly fraud,” a thief tried to get a refund for a pricy camcorder from an online retailer of photography equipment, but returned a box full of used power cords instead of the camera. Needless to say, his deception cost him in the long run.
Companies have to safeguard against these cyber crimes or else they may get doubly penalized: once when they lose the revenue from a sale and then again when they are hit with a chargeback fee. There may also be extra labor costs involved if an investigation is launched for the disputed charges.
In many cases of fraud, it will come down to your word against the buyer’s. There are several things you can do to battle deceptive chargebacks. Make sure to provide accurate descriptions and photos of merchandise on your website. These clear images can help prevent a chargeback due to a customer ordering the wrong product. Similar to the way some Mom and Pop stores post names of consumers who write bad checks, you can check databases for blacklisted customers who have swindled retailers out of money and merchandise.
Don’t allow fraudulent chargebacks to eat into your bottom line. Take measures today to protect your small business.
Profits are the lifeblood of a business but incurring a series of deceptive chargebacks can quickly drain that blood. As a merchant, you want to believe the best of your customers so you may mistakenly think that your company is fool-proof when it comes to cyber crime.
It’s been estimated that e-commerce fraud costs online merchants upwards of $3 billion dollars a year, and many of these deceptive practices take the form of dishonest chargebacks. This is a rising trend where buyers stiff retailers by claiming the product they ordered was never delivered, claiming the merchandise was returned but the merchant never refunded the money or claiming the product was damaged.
In one chargeback case, a thief purchased an expensive piece of jewelry from an online merchant. He then claimed the wrong item was shipped and returned a cheap watch in the box he shipped back. The merchant caught on and asked the authorities to launch an investigation. After some police inquiries, the scammer returned the jewelry.
This may seem like a drastic measure to take, but small business owners must be vigilant when it comes to battling cyber crime, especially in tough economic times when normally honest customers may resort to petty cyber shoplifting to save money.
To reduce the headache of chronic chargebacks, also known as chargeback abuse, there are several steps you can take. Using an IP verification tool, you can determine the location of the buyer’s IP address and cross reference the billing and shipping addresses to see if they match. If there are any discrepancies, you can contact the prospective customer directly to verify their order and payment information before proceeding. You can also require a signature upon delivery of your products so thieves cannot claim that they never received the merchandise.
Fraud may seem unavoidable, but putting the necessary anti-theft devices in place can protect your business.