Combatting Fraudulent Chargebacks

they're eating into my profits

[mxracer170]

Well it looks like my first post is going to be a bit of a rant. I just got my biggest single chargeback ($600) and I've noticed that they are becoming more frequent. When you factor in chargeback fees plus my cost on this item this one chargeback is going to put me out almost $1000. I thought I had it narrowed down to orders that were getting shipped to Miami but this one went to Maryland!

I'm sick of just giving into charge backs. If they continue to get worse the could put my quite profitable little website out of business. When we have a chargeback we give them all the info that they want (address verification, tracking info, copy of invoice) and we still lose every time!

What can be done to further combat against chargebacks? What does your website do? What percentage of orders get charge backed for you?

It really <makes me very angry> that everyone gets made whole in these things except for the merchant! While some <expletives deleted> gets a free $600 jacket at my expense! Police, FBI, Secret Service, nobody seems to care unless the fraud goes over $300,000.

[edited by: buckworks at 5:53 pm (utc) on Aug. 5, 2009]
[edit reason] Language [/edit]

[LifeinAsia]

She?!?

[bwnbwn]

She?!?

Opps typo sorry. LifeinAsia tried to go back and edit but time has expired.

[Gomvents]

ytswy, we do include an itemized receipt. sounds like I'll have to live with a small level of fraud. Hopefully credit card companies will get better at catching this stuff, people will get better at securing their computers / less likely to fall for phishing emails, etc. and the level of fraud should keep dropping.

[Bewenched]

We use Maxmind's Minfraud to evaluate credit card transactions before we ship.... it has drastically reduced our charge backs..... and when they do happen, you can report them and it flags that shipping/billing address, ip address, email address and phone number as being related to fraud which alerts other merchants and helps you in the future.... it's the only way we as merchants can attempt to combat it.

[Tonearm]

Bewenched, how often do you identify a false positive?

[Gomvents]

Bewenched, that would also be a concern for me right now as currently we get a very high % of orders approved and only a small rate of fraud (although we'd like zero fraud). Maybe I can use "Maxmind's Minfraud" just to append WARNING to the order confirmation we get to check the phone # with the whitepages or some other higher level of checking that normally would be too much of a hassle on every single order.

[Essex_boy]

My brother has a next day shipping policy on his site, only its next day when he is happy its a legit order. Genuine customers dont mind but the amount of fraud he has caught doing this is astronomical

[bwnbwn]

I quit the next day and 2nd day Essex_boy for that very reason it was 98% or better fraud.

[pbradish]

Hopefully credit card companies will get better at catching this stuff, people will get better at securing their computers / less likely to fall for phishing emails, etc. and the level of fraud should keep dropping.

That would be great, but I'm not holding my breath. It seems that fraud just keep getting worse and worse in e-commerce as the years go on. And even though we've gotten better at catching fraudulent orders that slip through, as business grows, we have less and less time to catch them.

Therefor - As of about a week ago, our customers' billing & shipping addresses must match. The only exceptions are APO/FPO. There's simply no more time to play around with chasing fraudsters and disputing charge backs.

Sure this will annoy some customers, but hopefully most of them will understand.

[jsinger]

It seems that fraud just keeps getting worse and worse in e-commerce as the years go on.

In traditional B/M retailing crime is getting worse too. For service businesses, collecting receivables is tougher.

E-commerce is a pretty good place to be, actually.

[anthonyt2325]

I don't sell anything high end so it doesn't work for me but a friend of mine who used to sell jewelry online used to use a risk management company that would screen the orders for him and warranty the order if they accepted it and it was actually a fruad charge. He was scared that they would turn down good orders because they were taking all the risk but it wasn't an issue. He passed away a few years back but I think the company is still around.