A chargeback rant

[dickbaker]

I have to blow off steam somewhere, and this seems like the most appropriate place.

Back on 10/15 I had an order for $305. On anything over $300 I do a name and address verification. I haven't had a chargeback in the several years I've been doing this.

The bank was First National Bank of Omaha. I called, and was told they don't do verifications. So I called my merchant processor, First Data, and had them do the address and zip code verification. The billing address and shipping address were the same, so that lessened the possibility of fraud.

Three days later I got a call from the bank's fraud department. They had the cardholder on the line, and she was wondering what the charge was for. I told her what the item was, and she said she'd never buy such a thing.

The woman from the fraud department said, "wait a minute. Someone hacked into this account two days before the purchase, and changed the address to the one in Washington state." The card holder's address was in Michigan, and the address that verified was in Washington state. I figured I was in the clear, as I shipped to the verified address.

Fast forward three weeks. I get a notice of a chargeback. I called First Data, and a woman there looked at the transaction. They hadn't set up my portal with a CVV verification, so I had always assumed that CVV wasn't available. She said that the only information available to verify was the zip code, which did verify. I said that the card holder lived in Michigan, and the zip code was for the Washington state address I shipped to. If I didn't have the verified address, the zip code would be Michigan, right?

I sent my letter of explanation, but I figured the bank would just lie. That's what they did. They came back today and took the funds out of my account. I called First Data, and was told there was nothing I could do. The bank decided it was fraud, it was my fault, and that's it. Their security was so lax that some punk could hack into a card holder account and change the address, but it's my fault.

I've been with First Data for a bit over a year, but I think I may go back to the company I had before. As far as I'm concerned, they did nothing to back me up. The verified zip code matched the address I shipped to. Shouldn't that be enough?

Damn, I'm steamed.

[LifeinAsia]

The verified zip code matched the address I shipped to. Shouldn't that be enough?

Simple answer: Nope, as you've discovered.

I figured I was in the clear, as I shipped to the verified address.

Nope, as you've discovered.

What you have seen is that the customer is ALWAYS right, according to the banks. (The "customer" being the cardholder, not you.) In the case of fraud, the customer is covered and the merchant is screwed. The banks have little incentive to improve fraud prevention because the merchant will almost always end up eating the losses, not the banks.

Since you have the hacked shipping address, about all you can try at this point is contacting the local police in Washington state. If the criminal was stupid enough to use their actual address (but most likely it was the address for someone out of town for several days), the police could potentially do something. Whether or not they actually would is a different story. But chances are that other credit cards were hacked as well, and if there are other reports for that address...

[dickbaker]

Another chargeback today, for $1052. The name and address in Sarasota, Florida verified. It was sent signature required. It was signed for by E. (name withheld). When I saw the chargeback today, I did a reverse search on the address and saw Ellen (name withheld) associated with the address. I called her and asked if she received a package last month addressed to Catherine (name withheld).

She said she receives packages every day, and that she works for a company in England doing this. I wanted to get her on a recorded line, so I asked if I could call her back. She's not answering now. I've run into this before. She's sending stolen merchandise or items that are prohibited from export to other countries. I can get the FBI involved as well a as a State Department agency that vigorously enforces a UN arms embargo treaty that covers this product. I may be able to get the sherif's department interested. I will get the Postal Inspectors to do a report. But none of that will get my $1000 back.

I've called the Sarasota sheriff's department, but haven't received a call back.

The name and address verified. I wouldn't have shipped a $1000+ item if it didn't. That means that the card holder uses the address of this "freight forwarding" facility, or her account was hacked and the address changed. I tend to think it's the former.

This is making me physically sick.

[engine]

Oh, that's really bad, and i'm sorry to hear that.

I have had experience of some banks being disinterested in fraud: Well, that's the impression they gave me. It seems to me that it will cost them too much to chase down these fraudsters, and that's why they are lackadaisical over it. That is not good enough, imho.

Good luck getting the FBI involved.

[dickbaker]

The FBI called me on that order. The agent does nothing but pursue cases of defense-related products being exported.

The banks don't care because they never eat the costs. I'll dispute this, but I have no way of proving this was the confirmed address if the bank denies it. And I am sure they will lie.

[Essex_boy]

Yeah I had one years ago, $500+ chargeback. Guy emailed me saying thanks great item then did a charge back which he won.

I keep back 5% of sales to cover this situ

[tangor]

Not what anyone wants to hear (and I do feel pain for the OP), but for some items I will not accept "card" payment, only wire transfer or escrow, and in all that time all those sales have been good. (No way to charge back, though can sue if unhappy, and money is not returned unless goods are returned in AS SHIPPED condition).

Pick and choose your battles, and the amounts you want to battle over.

Aside: Credit, and Cards and "fictional paper money" will be the end of civilization as we know it. Mark my words. :)

[toidi]

But if you had ssl installed, this would not happen. /end sarcasm

seriously, the responsibility for online security is dumped on the public and merchants while the banks routinely leave their back doors unlocked.

[dpd1]

It's very strange how this stuff happens in waves. Last year for me was a breeze. Solid sales flow... Very few problems... No returns... Not a single lost or damaged package. Now two weeks in, and it is nothing but problems. Sales way down... Already had three damaged shipments. Or like with your charge backs... Nothing, then back to back. It's bizarre. Never have understood that about the business.