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about cc fraud




9:12 am on Oct 14, 2003 (gmt 0)

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hi all

i want to run a site ,but before doing this i want to kown something about cc fraud

for example ..

someone pay my site through ibill , but he used a stolen card .
and the money has been in my account

days later ,the card owner found his card stolen and he ask the bank to give his money back, so what will happen then ..?

does the bank will chanrge the money back from ibill companey .,and ibill charge the money from me?

anyone met this problem before?

9:27 am on Oct 14, 2003 (gmt 0)

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I've been trading online for over 5 years. In that time I have never had a single case of credit card fraud or an instance where anyone requested a refund.

Don't let some of the horror stories out there panic you.

Using your example I think you as the merchant would be okay and the CC company would suffer the costs. I'm not positive as it has never happened to me, but that would seem the sensible route.

9:47 am on Oct 14, 2003 (gmt 0)

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It really depends a lot on what you're selling - high value, readily resaleable, goods will attract fraud (not just an online problem though).

I don't know iBill, but I would expect you wlll have to take the hit for any goods shipped on a stolen card - thats the way a normal merchant account works anyway.

The best defences are only shipping to the card holder's address, not shiping to countries with a high history of fraud, and (if possible) checking transactions before you process them so you can perform a gut-check on them.

It really is a product dependant thing though. If you're selling 9 3/4" specilist Acme widgets then you won't have a problem. If you are selling top of the range laptop computers, you will.

10:09 am on Oct 14, 2003 (gmt 0)

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I have been trading 4 years on the internet [webmaster related programs]. And I have a lot of problems with fraud.

I get chargebacks and persons asking for refunds.
And the problem is that americans can easly ask a chargeback from there bank. The other problem is when you get a lot of chargebacks, your merchant account get terminated.

<added>A chargeback cost you also $20 or more.</added>

10:31 am on Oct 14, 2003 (gmt 0)

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I also get a lot of fraud attempts. I use pre-auth and manually complete each transaction, ignoring the fraudulent ones. I imagine that the amount of fraud attempted turnover would be about an extra 25% of my actual turnover.

There are many things you can do - many are posted here (try looking through older posts) and many more are advised by the card processors. Ways to protect yourself - they are not perfect but can get you out of the majority of chargebacks.

12:19 pm on Oct 14, 2003 (gmt 0)

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About 10% of all our transactions are fraud attempts but most could be picked up easily.

Our chargeback rate is now less than 0.3%. Almost all these chargebacks had some suspicious features but we let the order go through because they were covered by the Worldpay guarrantee scheme.

I don't think you should be too unduly worried about credit card fraud. You may take a few hard hits in the beginning but once you have paid your "school fees", you will be be able to handle it.

9:11 pm on Oct 14, 2003 (gmt 0)

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I agree with this quote:
"Don't let some of the horror stories out there panic you"

I did panic the first time I got a chargeback. After all, they can take months to show up and I didn't know how many others were coming. Not many, as it turned out.

We sell low value items that aren't easily resold. We don't take any orders from outside the U.S.

We do get weekly attempts from Nigeria and Indonesia to place very large orders. I assume 100% of those would be chargebacks if we accepted them.

Our losses due to chargebacks are about 0.1%

2:34 pm on Oct 25, 2003 (gmt 0)

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Hi chsz20,

Many things have already been said... and the fraud rate depends on your type of merchandise.

We run a consumer electronics site and found 20% of the orders to be fraudulent. We got hit 9 times in a row from the same person under different names and addresses... we fulfilled 3 orders (worth $4,000) ... which got charged back, have paid our school fees, learned our lessons, and improved our system. The latter would have detected order 2 and 3, plus the others we detected anyway.

The people who process the payments have now a good gut feel for the phoney ones.

My stance is too stuff credit cards altogether (will continue to accept these), and entice customers to pay via direct deposit into our account... quite a common option here in Australia. We are currently implementing a "Best Price" scheme, where the price is shown 2% less than the normal price, with a link "How to get the best price?"

It then explains to simply subscribe and receive a voucher, valid with any purchase from our store -- if payment is made via direct deposit. On checkout, the customer enters the code and gets 2% off.

What is the point: The customer makes 2%, we don't loose a penny, as we simply pass on the merchant fee we do not have to pay, and enjoy a risk-free payment transactions, without chargebacks :)
... and without violating the merchant conditions, which do not allow different pricing for payments with cards.

The problem with card-not-present transactions is that the merchant will have to put up with the loss. Card companies do next to nothing to prevent this from happening in the first place, such as checking against card holder's name and address... again at least here in Australia, where they hide behind Privacy laws... though a simple true/false check could avoid many fraudulent orders.

I have just tracked down the person, and reported her to the authorities. As it turns out, she is renown for this kind of thing, and has already committed online fraud offences worth over $100,000...

If horror stories are around, this is one of them.

All the best for your online ventures.


6:14 pm on Oct 25, 2003 (gmt 0)

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Im in the Uk I have more trouble with stolen cheques than cards.
7:44 pm on Oct 25, 2003 (gmt 0)

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We rarely encounter stolen checks in our stores. Heck, many people just open accounts with their real name (often a common name) and write bad checks. The scammers are women who have had many names over the years and move frequently.

Within the past 10 years, banks have begun to run simple credit reports on people wanting to open checking accounts. It is now vastly more difficult for crooks to open account after account. Our bad checks have gone way down in our stores.

10:39 am on Oct 26, 2003 (gmt 0)

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If you are still very worried about it. I suggest you look at the worldpay guarrantee scheme. You pay 1% extra plus 20 GBP per month.

Although our chargeback rate is now less than 0.3% and therefore Worldpay is making money out of this. It has proved well worth it in our case, especially with respect to the time saved in checking each order.


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