Big changes have recently been implemented that will benefit both merchants and consumers in the EU. A statement released by Merchants Payments Coalition, an international organization representing retailers, supermarkets, drug stores, gas stations and online merchants announced a reduction in “swipe fees” paid to banks and credit card companies. These swipe fees increase the cost of doing business for merchants, thereby increasing the cost to consumers for everything from groceries to gasoline, so this news is sure to have a positive impact on the EU market.
The change was put into effect after 28 countries of the European Union concluded that Visa, MasterCard and their banks were gouging consumers and merchants. The new rules include setting a maximum swipe fee of 0.2% on debit cards and 0.3% on credit cards.
By comparison, fees are currently up to a dozen times higher in the U.S. As an example, a bank might charge a grocery store $4 on a $100 purchase of groceries if the consumer pays via credit card. After this ruling in Europe, that same transaction would cost the store just 30 cents.
With this landmark ruling in the EU comes hope that U.S. policymakers will reevaluate these inordinate fees. After all, the U.S. currently has the highest swipe fees in the industrialized world.
By Melody Lashmar Operation Choke Point and increased pressure by bank regulators on Financial Institutions to identify and eliminate merchant fraud has certainly increased the monitoring efforts by banks regarding their payment services. Under Operation Choke Point, Financial Institutions, ISOs and IPSPs are being held liable and accountable for their merchants’ fraudulent activities.
The FTC has communicated that Financial Institutions and payment processors know or should have known about any deceptive acts or practices of their merchants. They lean on the assumption that Continue reading
By Melody Lashmar The phrase “Operation Choke Point” conjures up many images and is representative of the spirit in which the authorities are using their power to target the providers within the payment industry.
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
Have you ever stood at a checkout line, swiped your card of choice and then were told that it had failed? When that happens, what is your next move? Many of us will Continue reading
By Melody Lashmar 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.
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.
By Melody Lashmar
You have some ‘splainin to do
Things have been going along just fine but, seemingly out of nowhere, you are getting questions on your merchant processing. Technically, you are compliant with the payment association rules, so why all these questions? It seems that the things you used to do are now not accepted and things that were previously forbidden are now allowed again. And round and round we go. Perhaps the contradictory activities are best explained by some of the information provided in this article.
The FTC has been very busy recently Continue reading
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.
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