A difficult chargeback problem

Any way to fight it?

[dickbaker]

This is an involved story, but I'll try to be as brief as possible.

Back on 3/31 I received an order for a $299.95 widget from my site. The "customer" would have already received a confirmation email for the order. As always, I followed up the order with a hand-written thank-you email to let the customer know when the widget would ship and when it would arrive. On the day that it was scheduled for delivery, I sent another email making sure that the widget arrived, and that the customer was pleased.

A day or so later I got a phone call from the woman whose name was on the order (the "customer"). She told me that some guy she met on an online dating site had been sending her all sorts of things that she didn't order. She said she didn't even own a credit card. She said she'd been in contact about all of this with the police as it was frightening her.

I didn't really know what to do other than wait to see if a dispute showed up in the mail. Well, sure enough, I received a letter from American Express yesterday saying that the card holder was questioning the charge.

A call to American Express revealed that it was not the woman who owned the charge card. The card was issued by a bank in Honduras, and American Express didn't even have the card holder's name.

I called the woman to try to get her to return the widget to me so that I could settle the disputed charge and also return the widget to my distributor for a $250 refund. The woman told me that she wouldn't send it back as the police were keeping it for evidence. I told her that it was not her property or the police's property to keep, but she hung up on me.

I called the police department in her town, but they were unaware of any investigations involving the woman or the supposed stalker. A detective is supposed to call me in the next few days to gather more information.

If I don't get the widget back, I'm out $550.

Am I screwed, or is there any way for me to get the widget back?

Thanks for any replies.

[vincevincevince]

You could probably advise the woman that you'll be taking her to court if the goods aren't returned. This business of an card with no name which still matches the address verification is rather odd.

[jsinger]

She told me that some guy she met on an online dating site had been sending her all sorts of things that she didn't order.

Probably truth in that. My guess is she forwarded those items to her new online "boy friend's" "store" overseas.

Yeah you could sue her civilly for conversion of your property. Could be criminal conversion too. Doesn't matter how she got it. She has an obligation to return it to you.

police were keeping it for evidence.

Could it be the FBI? Postal Police?

If I don't get the widget back, I'm out $550.

Why that much?

[jecasc]

The woman told me that she wouldn't send it back as the police were keeping it for evidence.

If this were the case they would probably have notified you. At least she should be able to show you some sort of receipt from the police.

[bwnbwn]

dickbaker
Do you not verify credit cards before processing the orders your get, if not this is a disaster waiting to happen. Not sure of the number of orders you get but you could be getting many more chargebacks in the coming months.
I hope you can get the order returned but it is highly unlikely. I suggest your cc security pick it up a notch and check all cc's before processing them.

It only take 2 minutes to check the card.

[dickbaker]

vincevincevince, there's no way that American Express can match the name or address of the woman to the card number. If it were an American Express card issued by the company, they could do that. But since it was issued by a Honduran bank they have no way of verifying the information.

jsinger, I'll be out $550 because I have to pay the $299.95 chargeback in addition to the $250 that I already paid my distributor for the item. Actually, since I also paid the shipping, I'l be out $560.00.

bwnbwn, I'll have to check with my processing company to see if it's possible to verify the name or address on a card.

I'm new at this (a few months) and haven't had to deal with chargebacks before. The worst I've had are idiots who want to return an accessory I sell because they thought the big expensive widget shown in the picture with the accessory was included. This despite the fact that the photo on the page says, "Big Expensive Widget Not Included." Yes, there are people dumb enough to think they can get a $300 accessory and a $1500 widget for $300. :(

[jsinger]

How was this shipped? Using US Postal Service brings this into the realm of mail fraud.

[LifeinAsia]

jsinger, I'll be out $550 because I have to pay the $299.95 chargeback in addition to the $250 that I already paid my distributor for the item. Actually, since I also paid the shipping, I'l be out $560.00.

Technically, you'd only be out the price you paid for the item, the shipping, and the $10-20 chargeback fee. The $299.95 you're "out" is money that you already received, so taking the same amount back is really just a net "loss" of $0 for that part.

there's no way that American Express can match the name or address of the woman to the card number. If it were an American Express card issued by the company, they could do that. But since it was issued by a Honduran bank they have no way of verifying the information.

Who told you this? I find this very hard to fathom. Some idiot at AMEX? Call back and talk to a supervisor (I've found that a lot of the lower level people there can be idiots). It would be like calling Visa and being told that specific card was issued by Bank of America, so they can't verify the address.

I called the police department in her town, but they were unaware of any investigations involving the woman or the supposed stalker.

If you don't get anywhere with the person again, I would call the police department again with all the details. One way or another, she's apparently involved in a crime.

[edited by: LifeinAsia at 4:03 pm (utc) on May 16, 2008]

[bwnbwn]

there's no way that American Express can match the name or address of the woman to the card number. If it were an American Express card issued by the company, they could do that. But since it was issued by a Honduran bank they have no way of verifying the information

What he intended to say if the card is an international AE card and he is in the US AE US doesn't not have the name and address of the international customer. He will have to get the issuing bank from his merchant provider call the issuing international bank to get this information.

This is one of the main reasons I quit internationl the expense and time it took to verify a card was horrible and the differences in time. Some I had to wait till after midnight my time to check the card out and calling an international bank was difficult to get the information verified.

[jsinger]

One way or another, she's apparently involved in a crime

Yep, she probably went along with the transshipping for a time and got cold feet. She said she was in communication with the police. But the police may have initiated that.

Hanging around dating sites and has no credit cards... tells you she probably doesnt have two cents, or 2 IQ points.

[dickbaker]

jsinger, the thought occurred to me to call the postal service fraud division. They told me that this was definitely something they would get involved with.

So, she'll have the police and the postal inspectors investigating, and maybe a civil suit on my part as well. I'm going to make this woman's life really entertaining.

[ispy]

Easy. If the billing address matches the card holder address when you put through the charge, it does not matter what the shipping address was as long as it was signed for.

This says that the cardholder gave permission to ship something to another address (which is perfectly ok and allowed of course), and provided their details at the time of purchase to verify their identity.

As far as I know all disputes and their defense are similar in that they ask for similar info. But, I hear this type of complaint time and time again. Once again, if the billing address matches, and the package was signed for, you should be OK. A CCV, phone number, and name match would really seal the deal.

Think about it. If anyone could buy anything they wanted and simply ship it to another address and do a chargeback?

[fraud master]

Amex partner issued card are very common and its true, most of the time they cannot verify the address. Sometimes they do not even have the phone # to the partner issued bank.

This scam the woman was part of is very common. Dateline NBC ran a story on it last year. Most of the time these orders are placed overseas, are you checking the ip addresses on b2<>s2? You really should be.

[dickbaker]

fraud master, I don't know how to check the IP's of people ordering from my site. There's probably a filter in my stats program for that, so I'll have to check.

[planetp]

wait!...you are not only out the 650.00 ...what about the 3 percent inbound and the 3 percent out bound your cc company charges you..now you have an additional 36.00 added to your misery!..this has happened to me years ago when e-com was in its inception and trust me.....your better off chalking it up as a good lesson learned because if amex is wrong on this one and i find it hard to believe....they arent going to fess up to it!...if you have the time...make her life miserable! but for a single instance legally the FBI dosent jump at theese cases..Pep

[vincevincevince]

dickbaker, can you confirm if the address came back as verified, and which address was verified (shipping, billing, or both)? That's assuming of course that shipping and billing didn't match. In addition, was there a CVV match?

For at least a few weeks, I'd advise changing your policy to shipping only to the billing address and only billing for a confirmed address and CVV (if not, then make it a permanent change)...

[dickbaker]

At the risk of sounding very, very stupid: how do I verify that the shipping address or the billing address is the same as the card holder address? Who do I call?

My card processing company doesn't require the three or four-digit code for authorizing transactions.

It would be helpful for newbies like me for there to be a sticky in the Ecommerce forum or elsewhere with tips on how to avoid fraud. Don't know if that's possible or not.

[bwnbwn]

dickbaker the only stupid question is the one never asked. This is a learning curve for you.
Call your merchant services provider they can provide the numbers to call.

[webmasterworld.com...] might help some with getting some basic knowledge on fraud.

[lorax]

>> sticky in the Ecommerce forum

[webmasterworld.com...]

Got a thread you think should be added? Sticky me.

[dickbaker]

OK, I did call American Express as well as my card processor. I tested my own American Express card using my real address and name, and also using a fake address and name. It worked.

I tried checking my Mastercard, but the system rejected it. The support person said it probably has something to do with the issuing bank.

I'm not sure what to do with situations like the latter.

[vincevincevince]

Regarding your processor, my thought is to change to another one because any reputable processor should be able to do the address verification automatically at capture, and will be checking the CVV (number from back of card).

I tried checking my Mastercard, but the system rejected it.

In such cases, you view the order with extreme suspicion and then undertake your own process of manual verification.

People differ in how they do this - ranging from checking the home number in the directory and then placing a call to confirm - to requiring a scanned or faxed copy of last month's credit card statement. You can always ask the user to use another card or other supported payment type.

The Library [webmasterworld.com] here has some very valuable threads on this kind of verification, e.g. this thread [webmasterworld.com].

[bwnbwn]

dickbaker,

In certian areas I am sure what vincevincevince said is the way to go but for you it isn't as you don't have the volume of orders that needs this type of processor and I really don't think you will be changing proceessors at this time so that said.

Let me try to explain as best I can what I mean by checking a Credit card.

I don't want the credit card processor trying to check an address for me at this point as I am like you I need every order I can get right now.

We have discovered many times a customer has moved and their address has not been updated on the credit card. When we get a bad check we then call the owner and get the old address to check and verify then suggest the information be corrected so this won't be a problem again.

or if we get a bad check and call and get a bad number then bingo bad order.

We always always call if the billing is different than the shipping other than an APO as we have experienced fraud orders with the owners address, phone number and zip. Always call the billing number on the order and verify the charge.

Master Card and Vista have an 800 number you can call to verify the address and zip of the card holder. I will get the numbers for you tomorrow and post them for you.
AE and Discover have their own address verification numbers and will post them as well tomorrow.

What you do is get the credit card information from your merchant service admin area, then verify the address and zip with the order.

This process only takes a few minutes to complete and helps you learn to spot funny looking orders. All orders shipped to a different address other than the card holders address gets a call as we have many times checked the card and the billing address checked out but when we tried to call the owner bad phone number.

My best advice to you is.

Consider every order you get as fraud until you have proven it isn't

this way you will learn the ropes very quick and learn to spot those funny looking ones that just don't seem right.

[bwnbwn]

dickbaker
Here are the numbers to call to verify address of the card holder.
Master card and Visa 1-800-645-9120 select option 3
AE 1-800-528-2121 select option 3
Discover 1-800-347-2000
Like I said
1-get the card info from your merchant service admin area.
2-have your merchant account to input in the call as this will be verified first before you can use the system on all the above numbers
3-check the address and zip I think you can even check the phone number but it has been some time since I have done it as we have an employee that checks all the cards now.

This only takes a couple minutes to do and as I said treat every order you get as fraud until you prove it isn't.

[dickbaker]

Thanks, bwnbwn!

You're right about the volume of orders. The May through August months are the slow time in my niche, so I'm getting a fraction of the orders that I had earlier this year. Right now a chargeback that costs me $250 is the equivalent of one to two weeks of profit.

[dickbaker]

An update for those still interested in this weird story.

There's nothing like a detective flashing a badge to get some action. I got a call from the sheriff's detective who was given this case.

While the detective agreed that she was a can or two short of a sixpack, he believes she's innocent. The "boyfriend" was sending her all sorts of stuff, and then asking her to send it to another person. The classic scam.

She didn't think anything of it until I called her to raise a fuss, at which point she realized something wasn't right.

So, she's going to give the widget to the detective, and I'll arrange for the widget to be returned to my distributor for a credit.

I also gave the detective the card number. Even though it's from a bank in Honduras, he's pretty certain he can find out who's behind this. I wish him the best.

I am now following all of the recommendations folks here have posted and am checking and double-checking addresses, names and zip codes.

Thanks for your input.