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Ecommerce Forum

Handling dishonest customers who claim item is missing from order
Handling false loss or damage claim

 9:32 pm on Jan 7, 2006 (gmt 0)

A friend of mine and I both have e-businesses and have both run into this problem:

I fill a legitimate order myself, ship it with insurance and delivery confirmation slip, and the customer claims an item is missing out of the sealed package. I know for a fact that the order was complete when shipped.

When this happened in the past (only once, thank goodness!) the item alleged to be missing was very inexpensive, and after asking the customer to search carefully through the packing materials, I finally gave her a refund on it. However, I wouldn't be willing to do this for an item that cost me more than $30.

Is there anything I can do when packing the order that will legally indicate that I really put it in the box? What do the rest of you do in this situation?



 12:05 am on Jan 8, 2006 (gmt 0)

Well if you're not the manufacturer, there is not much you can do to know that a sealed box contains all the items it says it does, short of unsealing it, which would then probably prohibit you from selling it as a new item.

It is not a common occurrence, but it is not all that rare either.

Software sometimes comes missing manuals or forms or CDs. Hardware comes missing cables or CDs or manuals.

My nephew got a toy and it was missing some stuff.

I've had a number of items come missing something out of the sealed box.

I've only said something once, and they sent me the missing part separately.

You should be able to reclaim any losses to you from either the supplier or the manufacturer, since you also got it from them missing something.


 12:42 am on Jan 8, 2006 (gmt 0)

It may seem absurd on first blush, but consider taking a digital photo of every order before you seal the box. This practice is very common at larger operations - though they usually have an automatic camera suspended above the packing line.

You take the photo, then just dump it on your computer. If you have a complaint, you review the photos by date. Every quarter, purge old photos.


 2:13 am on Jan 8, 2006 (gmt 0)

I don't anything will work, having a credit card is basically a license to steal from merchants.

A customer order and received two items from us recently and wanted to return one for a refund. We told her to send it back to us. Instead of sending it back to us, she raised a chargeback claiming that the item was missing from the package we sent her. Guess what, the chargeback went through quickly and we were not given the chance to appeal.

Basically, once a chargeback is raised, the banks want it to go through so that so they can get the chargeback fee from the merchant.


 2:14 am on Jan 8, 2006 (gmt 0)

If you know for a fact it was there, then call their bluff. Tell them you checked it and it is there. If they try to do a chargeback dispute it and claim that they received what they ordered. The merchant will win in this situation if the delivery has been properly documented. It would then be up to the customer to pursue the matter legally if they felt they had enough evidence to raise doubt, such as objective witnessess present upon openeing the box, weight discrepancies etc.


 11:44 am on Jan 8, 2006 (gmt 0)

Oh boy! Ive had emails from saying thanks for teh order and then recharging it.

I dont to be honest with you think theres much you can do if your items are heavy weigh the total package so if one was missing then youd know wen you refer back.

The amount of people who will claim to have a missing piece is rare but its a worrying trend.


 1:11 pm on Jan 8, 2006 (gmt 0)

"It may seem absurd on first blush, but consider taking a digital photo of every order before you seal the box"

Nice idea. If possible, put a second copy in with the shipment. That way they can acutally view what's supposed to be in the order. They might wonder "why did I get this picture?" It could prevent dishonest thoughts.


 1:16 pm on Jan 8, 2006 (gmt 0)

The merchant never wins! We have had documented deliveries, and even with the customer admitting that they have received the order.

The rotten fact is once a chargeback is initiated, the banks want it to go through so they can rip the chargeback fee off the merchant!


 3:32 pm on Jan 8, 2006 (gmt 0)

The rotten fact is once a chargeback is initiated, the banks want it to go through so they can rip the chargeback fee off the merchant!

that's utter nonsense - it costs them money to process the chargeback and what they get from chargeback fees is peanuts compared to the costs of handling all chargeback requests

merchant providers make their money from payment processing, not chargeback processing


 3:51 pm on Jan 8, 2006 (gmt 0)

Although that were true, if the chargeback does not do ahead, the bank gets nothing at all. Getting back a chargeback fee is better than nothing. The whole chargeback procedure is completely loaded against the merchant.

All our recent chargebacks are in this category. Even when the customer admits they have have received the product and agree to withdraw the chargeback request. The chargeback still goes ahead and we were unablet appeal against it. Yes, we use Worldpay as well.

My take is that if the customer has to pay a chargeback if the chargeback fails, then they would be less spurious chargebacks raised.


 4:26 pm on Jan 8, 2006 (gmt 0)

My take is that if the customer has to pay a chargeback if the chargeback fails, then they would be less spurious chargebacks raised.

That defeats the purpose of the chargeback system!

How else does the customer get their money back and get to keep the product for just the cost of filling out a basic complaint form, the merchant services/credit card procesors get an unwarranted fee and the merchant get completely ripped off due to the unregulated theft of the product, fees etc.. from them.

The chargeback system in the U.S. is completely flawed and needs a complete overhaul by Congress. Even they can't really mess it up any worse than it is.


 6:15 pm on Jan 8, 2006 (gmt 0)

Thank you all for your responses. Some interesting suggestions (please send more).

I'm interested in the "charge back" discussion, because, although I haven't had one yet (5-1/2 years on the internet) I'm sure it will happen.

This may be altering the subject a little, but I had a discussion like this with the head of the state good business group I'm a member of (I'm not sure I'm allowed to give their name, so I haven't). They've instituted a new business rating system that essentially gives a business a report card with a rating of from AAAA to F. My argument with the head of this organization was that this was too particular a rating system and could be potentially damaging to a merchant. Say the merchant had the situation I described at the beginning of this thread, declined to replace or pay the dishonest customer for the merchandise and when the dispute was referred to this organization, they ruled against the merchant. So your rating drops because of one dishonest customer.

This man couldn't seem to grasp that there are no-win situations for a merchant and that their system could penalize the merchant. (I've had a number of these kinds of problems over the years).

So do I reward their dishonesty with a replacement or a refund, or refuse and let them demand a charge back or make a complaint to the business organization, both of which hurt me more than it hurts them?

What do you folks think about putting a printed paper inside the order stating that there are x number of packages or pieces included and that this order was checked by Susie Smith or whoever. Catalog stores do this all the time.

Any thoughts?


 7:36 pm on Jan 8, 2006 (gmt 0)

I added a second payment provider in addition to Paypal to my digital goods store.

After a month, I got a great order for $350. 2 months later, they notify me the card holder of the purchase had charged it back.

I checked it out, and the fraudster was dumb enough to use the same yahoo.co.uk account and password (!) on my site as with his yahoo account. Now that this is a shoplifer and no longer a customer, I had no qualms with entering his yahoo scam account and finding all kinds of personal info about him and his other frauds.

What can I do though? I am out $350, plus I had already paid the manufacturers of my digital goods their 50% commission.

It's too bad because this payment partner is really great with personal service, sending handwritten xmas cards, etc. I'd love to use them exclusively, but this is just ridiculous: i have zero protection, someone can use another stolen CC number, order half my inventory, and then 2 months down the road the cardholder finds out and it charges it back.

What kind of nonsense is this? The onus should be on the card holder, since the majority of credit card holders cannot be considered 'honest' since they are living in debt already, on borrowed time. Whatever happened to 'the store is always right'?

The store is the one with the reputation, and the public presence; it is increaingly probable the 'consumer' is an identity theft case and not a legitimate customer.


 1:03 am on Jan 9, 2006 (gmt 0)

yes, the whole chargeback system is flawed, but it's down to you as the merchant to either prevent chargebacks occuring in the first place, or take action against cyber-shoplifters if you do get a chargeback

chargeback prevention has been well documented here before - loads and loads of detailed information, so no need to repeat it all, but i'll stick a couple of the real basics in here

use AVS, get a match, only ship the goods to the cardholder and require a signature, and chances of chargebacks are massively reduced

use cardholder authentication (3D secure / verified by visa / mastercard securecode) - the online version of chip and pin - it protects you from some forms of chargeback

and if you do get a chargeback, you know the cardholder has the goods so recover the goods or take the cardholder to court for non-payment and include the costs of the recovery action

anyone wanting more info on preventing chargebacks / recovering costs or goods in the event of a chargeback should read back through older threads - there's enough to write a big thick book

the vast majority of chargebacks are easily prevented - yet business owners find any excuse to ignore common sense or any excuse to whinge when they get a chargeback .................


 1:09 am on Jan 9, 2006 (gmt 0)

The onus should be on the card holder

so ..... if someone, let's say a nigerian fraudster, were to place an order, as they do, by typing in a "random" card number, and it happens to be yours, then it's your fault? would you be ok with that?

if that were to happen, as it does thousands of times each day, the merchant should be checking the AVS results and WHOA THERE the AVS doesn't match likely to be a fraud .... cancel the order .... and the good, responsible merchant has saved you (or rather himself) $5000 by stopping the fraud and stopping the possibility of a chargeback

simple, innit?


 1:25 am on Jan 9, 2006 (gmt 0)

Banks handle chargebacks differently, they are not all the same. Ifyou never win and you have dotted your p's and q's then its time to switch your merchant account to another provider. Try a small bank offering merchant accounts who will probably be more fair. They will often remove the money from your account but credit it back after you reply with you evidence and tell you what you need to submit for a successful dispute.


 11:01 am on Jan 9, 2006 (gmt 0)

Just checked my merch provider's sign up process: they do have the AVS code included in the customer enrollment process.

This particular guy who ripped me off was from the UK, and looking at the quality of the workers at Heathrough Airport alone (mostly standing around chatting and goofing off), I could easily see thousands of international CC's being copied down, 3 digit code and all, and distributed every day.

Multiply that by the whole country, and then the world, and you've got a serious flaw with the AVS system.


 12:54 pm on Jan 9, 2006 (gmt 0)

flyerguy - you mention heathrow airport - was your order addressed to heathrow airport?


 2:05 pm on Jan 9, 2006 (gmt 0)

Ifyou never win and you have dotted your p's and q's then its time to switch your merchant account to another provider

It's the customer credit card company that will make the decission on the charge back. The merchant provider only shuffle's the paperwork, and has no say in the chargeback.

Some credit card companies will give the customer a chargeback regardless of documentation. I had one chargeback, and I had confirmation of banking detail, delivery confirmation, and proof it was not fraud, and the customer still won the chargeback.

What is needed is a database of credit card companies, and how likely they will honestly try to resolve the dispute process, without bias.

For Example

A: Will examine the documentation and truly handle the dispute process in an unbiased manner based on documentation.


F: Gives the customer the chargeback no questions ask, just to stop there whinning. Don't submit a chargeback dispute, our customer service staff will just shred it without looking at it.


 2:24 pm on Jan 9, 2006 (gmt 0)

What is needed is a database of credit card companies, and how likely they will honestly try to resolve the dispute process, without bias.

unfortunately that won't help in the slightest - consumers will choose their own credit cards

what *will* help is 3D secure becoming compulsory, as chip and pin is for cardholder present transactions in the UK

but by far the greatest anti-fraud measure is common sense on the part of the merchant


 3:03 pm on Jan 9, 2006 (gmt 0)

No, i sell digital downloads and don't 'ship' anywhere.

I just mentioned heathrow as an example of a very busy place, with lots of credit cards being used to pay for coffees, etc., staffed by lower-middle class people who may have a cousin who knows how to use the internet.

The fact that this particular fraudster is an immigrant to the UK from a nearby country of Nigeria is moot because it would be racist to say that everyone from that region using an internet cafe is a fraudster, -maybe- it's just a coincidence and it could have just as easily been a teenager from Idaho.

However if it walks like a duck and quacks like a duck.. it seems like CC fraud is the national sport of many central african nations. And it seems like the merchant is the one who takes the hit most of the time, instead of the companies who are supposed to secure these payment methods.

In the same way that you will hardly get anything done if you go the police after someone has keyed your car;you just go the insurance company and pay your $200, it's cheapest for the merchant providers/CC companies to simply ding the merchant then to invest money in better fraud protection and prevention. What's needed is more complaining from the merchants...

flyerguy - you mention heathrow airport - was your order addressed to heathrow airport?


 4:26 pm on Jan 9, 2006 (gmt 0)

downloads .... nigeria ..... what do you expect?

like i said, the greatest antifraud measure is the merchant .......
i rest my case


 4:37 pm on Jan 9, 2006 (gmt 0)

Well in this case he applied to my site with the name on the stolen card, something like 'Linda Smith', and he was located in the UK.

Merchants can't be telepathic, it's up to the credit card companies and merchant providers to create better defenses.


 4:56 pm on Jan 9, 2006 (gmt 0)

I think what flyerguy meant was that the onus should be on the cardholder's bank, as this would be the case for purchases in bricks and mortar store with a signiture...

"and if you do get a chargeback, you know the cardholder has the goods so recover the goods or take the cardholder to court for non-payment and include the costs of the recovery action"

I think this is much easier said than done. Even if you win after all this, you may not see a penny.

I have to agree it seems much of these indiscriminate chargebacks seems to arise from the US. Where I am, it is very difficult to raise a chargeback.

Anyway, to put this all into perspective. Our chargeback rate is still around 0.2% and we use non-trackable shipping for most of our orders. So what I suggest is not to spend too much time, money and effort in preventing things that do not occur frequently i.e. photographing every parcel.


 10:30 pm on Jan 9, 2006 (gmt 0)

One of our drop shippers/suppliers takes pictures of the box being packed, fully packed, then sealed and then video of the whole process. We had one case of a lady claiming she didnt get everything in her package, we talked to our supplier and they sent us a bunch of pictures and a video of it being packed and sealed. We then sent all this to the customer and she never responded. This may be pretty expensive if you do the video part, but a cheap digital camera could work. This may be more time consuming than what your looking for though.


 12:18 am on Jan 10, 2006 (gmt 0)

Usually when this happens, I just send them whatever it is. However, when it happens with certain items often enough, then I actually discontinue those items. I have seen how my clientele has changed by my discontinuing high-fraud items.

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