|After reading this forum, I have second thoughts about opening|
a site up on the web. Granted I think our idea is a good one and one that will surely work over time. However, after reading about 40 pages worth of info, I wonder if it's really worth opening our business up to such liability (chargebacks). Our present business is doing well which does not deal with credit cards, we sell and service "widgets". Our idea is to increase the sales end to US customers only via an online shop. And it's not only fraud that I am concerned about but customers who just plain want to rip you off. I am wondering though since one of our main products will be sold directly to businesses and not end users if we would have to worry as much? Our B to B products would range in price from 800 to 3000 dollars. Our other stuff would be for public consumption and range in price from 50 dollars to 500 dollars.
I have spent an incredible amount of time researching a cart solution that would work for what we do, now that I think I have found that cart I have begun to look into the logistics of online commerce.
Anone have any thoughts on the above?
If you've read through all the stuff here on fraud and chargebacks, you should be well prepared for setting up a store, I wouldn't let it put you off, just make sure you embark on it with your eyes open. Also remember that people usually post their horror rather than success stories.
We're in a supposedly "high-risk" area and we've got chargebacks down to negligible and fraud to a level that we can almost be satisfied with - always room for improvement, and that's part of the process.
All you need to be is wary and youll be ok.
Having read all the post Im sure your now far better equipped to deal with orders from our Nigerian friends and others.
There are customers who will just want to plain rip you off, there always has been and always will be. Even in a brick & Mortar store. Fake checks, taking items without paying, stolen bank notes, fake bank notes, tolen credit cards, chargebacks. The list could go on.
At least with an online store you only have to worry about the credit card side of things, (and checks if you take them). You've got a lot of tools on your side (AVS, CVV etc.) and the banks are only a phone call away if you're worried. Just watch out for the Nigerians etc. Maybe only ship to the address on the credit card bill.
You just have to be aware.
|Maybe only ship to the address on the credit card bill. |
Just to add a little bit to this, you need to be careful with that too. Address verification does not actually validate the full address, only the numeric portion. For example:
If the card holders address is:
123 Main Street
Then anything where 123 is the "unique identifier" will validate:
123 Second Street
P.O. Box 123
One thing that will help is the way you ship the item - if you send it through FedEx with a signature required, you'll at least have some proof that the merchandise was delivered and you can go online and view the signature on the FedEx website. That way if there is ever a dispute for the purchase, you can send proof that you delivered the package. Another piece of advice - be flexible with your refund policy. If a customer isn't happy with the product, pay for the return shipping yourself and give them a full refund because otherwise they can just charge it back and keep it. A charge-back will cost you $10 to $25 depending on your credit/merchant provider and it will affect your ability to have your rates lowered down the road.
I wouldn't worry about it. There is a lot of noise here and you don't here from the huge number of merchants who have almost no problem with chargebacks and fraud. If you think you have a good idea go for it. You will quickly learn the recognize the signs of a problem customer and a fraudulent order.
Thanks for the encouragment. Since we will only be selling inside the US I don't "think" the outside the US fraud is as big a concern. What really concerns me is customers returning stuff or keeping it and charging back. It's something we have never had to deal with since we don't take credit cards at this time. I will continue to read the great information here and think about it some more. :D
|What really concerns me is customers returning stuff or keeping it and charging back |
We are strictly B2B and based in the UK. Our solution is to accept credit cards for small amounts, up to say £500.
For bigger amounts the customer must pay by bank transfer or cheque (no goods are dispatched until the money is in our bank account).
We find for large amounts customers usually want to pay by cheque or transfer anyway. To date I don't think our policy has cost us a sale, but if it has at least we are at least keeping the risk at a level acceptable to us.
|I am wondering though since one of our main products will be sold directly to businesses and not end users if we would have to worry as much? |
These are exactly the people that cause us the most trouble. Not the end users, other business. We sell to both. It seems there are more problems at the lower end of the price spectrum, with bigger spenders generally being more reliable. Your mileage could vary depending on the product line.
In the end it's a part of doing business. And, it isn't a daily problem, nor is it a good enough reason to avoid internet marketing.
Do not let the posts in this forum put you off. Although these problems do occur, they are not as frequent as it seems. It is just that we all get worked up when discussing problems of this nature.
We ship items that are at high risk for CC fraud all over the world, mostly by Normal NON-registered air mail. We get very few problems and our chargeback rate is around 0.3%. In our experience the vast majority of customers are honest. Your risk is further reduced if you ship within the US.
Sure we have been hit hard by CC fraud in the beginning but after handling thousands of fraudulent orders, we can pick the vast majority of them.
I was speaking with some other online business owners today and they recommended I stay away from AUTOMATIC charge card transactions, but instead have them queue on the server and then get approval from a person on our staff here. What do you all think of the approach as well?
|Do not let the posts in this forum put you off. Although these problems do occur, they are not as frequent as it seems. It is just that we all get worked up when discussing problems of this nature. |
I concur with Derekwong. 99% of orders go very smoothly so that we don't notice or discuss them. If you stick to the US/Canada and personally peruse large orders, you'll have almost no problems.
Most crime--like that Canadian killer crossing the U.S. border a few days ago with a bloody chainsaw and brass knuckles--is loaded with red flags.
|What really concerns me is customers returning stuff or keeping it and charging back |
Yes, a huge issue and far more important than rare fraud chargebacks.
There is nothing in the world more upsetting and maddening than supplying something of good value which the buyer uses successfully but have the buyer do a chargeback based on buyers remorse, the most common basic reason.
All the buyer has to say is the item purchased was somehow misrepresented, or worse yet she never got the order (easily done on electronic delivery items) and they will win the chargeback almost all the time, near 100%. Even worse the credit card firm or PayPal will even allow th buyer to keep and use the item ordered, with amazingly no requirement it be returned.
PayPal is by far the worst of the merchant accounts to use (even worse than bank merchant accounts) since if the buyer paid by credit card the seller will lose the case 100% of the time under certain circumstances, with absolutely no way to dispute the chargeback direct to the bank.
To add salt to your wound PayPal will even refuse to help the seller by giving you the buyers credit card number so you may dispute the item direct with the buyers bank, meaning in effect there is virtually no hope of ever winning the chargeback regardless of how good your case is.
I advise all sellrs to not use PayPal merchant accounts since there is no way to prohibit credit card use to fund buyer payments and the seller will lose 100% of the time involving several scenarios with no hope of a reversal.
Like another poster, I have had more problems proportionally with other businesses than with regular retail customers, but these were net-30 customers.
Someone else mentioned not allowing automatic capture. I think that is a very good idea and that this is where you prevent the most chargebacks. If you can look over the charge, you can do things like check their name and address in the White Pages, Google them, ask them for further information like the customer service phone number from the back of the card, and so on.
The only time I have had problems with the determined-to-commit-fraud customers that others describe, they have been people who kite checks, usually for very small amounts. Others who were determined to commit fraud I stopped at the authorization step.
In terms of buyer's remorse, I did once get a guy who wanted $900 worth of a particular widget and while I was arranging the purchase with the wholesalers, he called back and canceled it because he was worried that my widgets would not be of sufficiently good quality (he had never ordered from me before). But that was one time in four years. I have had many other people order over $1000, which is a very large charge for me, and not change their minds. Total number of chargebacks I have had in that time is five.
I do think it depends on what you are selling, which charges you decide to capture, how you treat customers during the process, and how accessible you make yourself to the customer. I think people are more likely to ask for a chargeback if they see you as a faceless company or as someone who isn't listening to them or helping them with their problem. Then it becomes the only way they can strike at you.
We had a nasty chargeback early on - the signs were there but we were new and eager for orders. Took 2 months to show up and we didn't have a leg to stand on.
Since then we've processed over 1200 orders - and rejected about 6. No further chargbacks since that lesson was learnt.
Something we always look at is the click path through the site - we had someone order 10+ items of clothing without zooming any photos, and every item they clicked in to they added. Emailed them with some made up question and didn't hear back so let the payment expire (we use pre-auth).
|I was speaking with some other online business owners today and they recommended I stay away from AUTOMATIC charge card transactions, but instead have them queue on the server and then get approval from a person on our staff here. |
Definitely the way to go.
It all depends what you sell. We process thousands upon thousands of credit card transactions and we only ever had 2 to 3 charge backs a year. We don't use AVS, and only scrutinize transactions over $500.00
The nature of our business does not lead itself to fraud. If I was selling to a religious faith market, I would expect zero charge backs, If I was selling sin based products, I would expect a high charge back rate.
Ask yourself, am what Im selling, have a good resale market at flea markets, paun shops etc. If the answer is yes, then watch out.
Right lgn1, a lot depends on what you are selling. By the way, you have been most fortunate (and I also believe somewhat rare) with your very low chargebacks vs sales. I assume you are selling a tangible product?
For others reading this thread, if you sell a product, is it perhaps cheaply made/non-quality, or easily breakable either by the end-user or in shipping? Does it live up to its advertising claims? Is there a lot of marketing hype in the sales pitch?
However, if it's mostly a service (in particular a non-tangible product), WATCH OUT! Especially if it's also electronically delivered. Also be warned for high chargebacks on software program or anything sent on a disk, thru downloads or online services.