Bitcoin has certainly been an interesting phenomenon to watch over the last few weeks. We’ve had bankruptcies, suicides, arrests, thefts, marketing, adoption by retailers, potential identification of the creator and discussions at all levels of government. It seems this recent interval has contained all the makings of a good mini-series.
Operation Choke Point is, in fact, the name that the authorities have given their combined efforts in stopping bad merchants by removing the payment processors that these merchants are using. I think that we can all agree that stopping bad merchants is a worthy endeavor, but the way in which it is being executed is causing unnecessary and unfair collateral damage to other merchants, consumers and payment processors.
Their “choke point” focus is akin to stopping illegal marijuana grow houses by Continue reading
By Melody Lashmar The Ivory Tower of Officialdom is at it again. They have spent time and resources on developing ways to reduce fraud in their network and they now want people’s opinions on their solution.
The current proposed solution is…. wait for it…. to do more of the same! Wow, what a brilliant idea; an absolutely stunning example of understanding the issues that exist and creating a solution which addresses those issues and, thus, reduces fraudulent payments.
Fraud is being measured based on Continue reading
Do you ever wonder why your underwriting experience can be so different when working towards the same goal with two different financial partners?
When you are looking for banking or merchant services you assume that you are going to be faced with nearly the same requirements from financial partner to financial partner. After all, the banks are heavily regulated and their exams are all based off of the same requirements.
But you and I know that consistency of requirements is not the case. As a merchant seeking processing, you will be asked for different underwriting documents, be given different reserve requirements, be charged different fees, be allowed different capabilities and be given different requirements for your offering to be “compliant”.
So what is it that makes bank requests and their outcomes so different for the same account?
There are a lot of factors that drive this diversity. The leading factor is Continue reading
There are many things affecting an online merchant’s ability to stay afloat in the competitive Internet marketplace. A downturn in the economy, business rivals with a similar product on the market and dwindling consumer confidence can all take a toll on your profits. In addition to these factors is the very real threat of e-commerce fraud, one of which is deceptive chargebacks.
One example of a chargeback situation that had devastating consequences is a travel company that recently closed its doors. Several customers who paid for their tickets online by credit card then turned around and contacted their card issuers to initiate a chargeback because they weren’t able to take the trip they paid for. If you think you wouldn’t be held liable for this type of chargeback, think again. If the transaction is charged back for any reason, including fraud, the merchant has to pay for the chargeback. Even if the situation is resolved in the seller’s favor, and they’re able to recoup the cost of the stolen merchandise or services, chargeback fees can add up.
It isn’t just veteran scam artists who are engaging in e-commerce fraud. Hard economic times might cause the average customer to “steal” products from an online retailer by saying he or she never received the product that was ordered. For example, a well-meaning consumer may have made a large online purchase for a flat screen television, but then found himself out of work the next day, so he may claim the television was never received. These types of scenarios can be frustrating for hard-working merchants who are trying to develop a loyal customer base and boost their bottom line.
In the ever-evolving world of online fraud, there are very strict time frames that are imposed on a merchant to contest a chargeback. If the merchant does not reply in the required time period, the chargeback cannot be contested and the merchant has to pay the chargeback regardless of whether a merchant has proof that the merchandise was delivered. This translates to emboldened consumers who make “friendly” chargebacks, believing they have little to risk. In some cases, card issuers are not aggressive in pursuing their customers for fraud.
As a business owner, you need to be proactive about chargeback abuse to stop scam artists in their tracks. One way to be diligent is by analyzing sales records. This can help you identify customers who charge back items on a regular basis and give you the opportunity to decide whether you want to continue doing business with them. Also, there is information available online that helps you determine which zip codes are notorious for online theft, so you can remain on high alert when a buyer asks you to ship to that area.
As summer heats up and people are heading off on vacation, buying graduation gifts and enjoying more leisure time, this season presents more opportunities for your small business to thrive. It also presents more chances for e-commerce scammers to strike.
In the case of chargeback fraud, banks are taking extra steps to ensure consumer safety and loyalty, while the merchant is getting the short end of the stick. These institutions may even encourage their consumers to avoid NSF fees by claiming that certain transactions are unauthorized.
What’s a merchant to do when a buyer makes a purchase and then claims he or she never received it or says he is shipping back a defective product but the merchandise mysteriously gets “lost in the mail”?
The following tips can help you prevent e-commerce fraud and limit the amount of dishonest transactions and chargebacks.
- Verify the customer’s order by sending a confirmation email before the transaction is complete.
- Make sure your company name and phone number is clearly listed on the customer’s credit card statement. Oftentimes, consumers will dispute a charge if they don’t recognize the seller’s company.
- Highlight your company’s contact information and make sure you provide excellent customer service. If you make it as easy as possible for a buyer to contact you should an issue arise, this discourages them from calling their bank to initiate a chargeback dispute.
- It’s been thought that Internet fraud often occurs late at night, so be wary of those purchases that take place in the wee hours of the morning.
- Be suspicious of orders shipped to the same address but using several different credit cards.
- Use an Address Verification Service (AVS) on all online transactions to verify the billing information the customer provides in the order with the information that is on file with the issuing bank.
We live in a society where many people want to get something for nothing. This is especially true in the retail world. Rather than paying for merchandise received, some deceitful consumers would rather “steal” their purchases by either claiming their credit card was stolen and they were charged for items they didn’t order or by stating they never received the item in the mail. Whatever the excuse, this causes an unwanted financial drain on the unsuspecting merchant. Not only do they lose the goods they shipped, but they also lose out on the amount they would have made on the sale.
Digital thieves have gotten creative about the ways they swindle gullible online retailers. In one case of e-commerce fraud, a man purchased merchandise from an Internet merchant and upon checkout, he registered with many different variations of his name and address. The hustler then initiated chargebacks claiming he never received the products. The small business owner grew suspicious and asked the police to launch an investigation. The authorities discovered that the con man was buying and reselling the products he purchased.
Although you may think something like the above scenario can never happen to you, think again. Chargeback-related fraud is on the rise as scam artists grow more sophisticated in their schemes to defraud merchants. The Better Business Bureau (BBB) offers the following tips for fighting friendly fraud:
- • Use a shipping service that tracks delivery. Some shipping firms provide tracking information and signature confirmation. This information can help verify whether or not the customer really received the product.
- • Deactivate or deny access to products. If you are a retailer who offers downloads or access to websites, you can stop a scam artist by denying access to your services.
- • Present a solid case to the credit card company. If you are diligent about maintaining records – including records of delivery or reimbursement and your return policy – this will greatly assist the credit card company and increase your chances for a favorable resolution in the case of a chargeback.