List of Warnings against eCommerce CHARGEBACK FRAUD
I keep seeing this type of posts. Fraud is one of those hidden things the gurus never tell you about. I have here a very long list of warning messages I send out to people who tried to do a chargeback. It’s a stern warning and it’s free. Otherwise, I’d have to shave 2% off rev for fraud insurance.
It’s worked before so feel free to use:
***COPIED FROM MY STORE, 1st link goes to Wikipedia don’t worry***
Chargeback Fraud is online theft. It’s illegal and it hurts every online store and honest shoppers. If we do nothing about fraud, it could freeze our entire business. In addition, we get fined from the bank for every active case, no matter if it’s legitimate or not! We report incriminating information to:
USPS Fraud List: http://ehome.uspis.gov/fcsexternal/
Your Police Department (we have your addresses)
Collections to destroy your credit rating: http://bravorecovery.com/services/
Chargeback Lawyers: http://www.masstsang.com/fraud-charges.html
Chargeback Blacklists: http://badbuyerlist.org/
If you used your parents or friends credit card to pay, it doesn’t matter, both of you will be reported
If you’re in any kind of school/business/professional license, you will be reported to them as well
We have enough information to find your school, parents, friends, bank, credit card company and IP address…
But we’d rather not do any of this! We know some people fall on hard times and resort to theft. We’d rather give you a refund, so contact us 🙂
How often does this work for you?
I would HIGHLY recommend a 3rd party software to do fraud checks, as a business scales fraud goes up, and trust me, it is a pain to deal with.
2/5 times, it does NOT scale, it’s for starters. When I did install 3rd party software, I would add up all the cost, and realized… meh… I’d rather give it up to the fraudsters than the 3rd party lol. Just my 2cents, and totally agree on a scale!
This guy gets it and I want to thank him for posting this. We do about 6,000 orders a month. We are slammed by friendly fraud all the time. Since we implemented 3D Secure that has eliminated 99 percent of the card, not present chargebacks. We use to have 30 to 40 chargebacks a month. With 3D Secure we get 9 to 18 a month. Customers now have resorted to non-delivery of merchandise, order cancellation, and defective goods as their reason codes. As a merchant, we have an obligation to combat Friendly Fraud. In the early days of the internet calling the fraudster’s police department use to work. In fact, we are still getting restitution checks from the State of Texas from a convicted fraudster. Now that doesn’t work any longer because they tell you to contact our local police department to initiate the complaint. We think it’s not fair to drain our local police department’s resources so we approach it in different ways. My staff is investigating the OP’s links with huge enthusiasm. What we have found that works well for us is the self-directed collections route from Old Debts. http://www.olddebts.com Then will we ding their credit report and those fraudsters will squeal like a pig when that happens which causes many to pay up.
>I have been wanting to implement 3D secure, got 2 chargebacks, and recently got a suspiciously large order and was unable to contact the customs by phone, so I canceled his order. (He never sent an email asking why) so I assume it was a scammer. But Square doesn’t have 3D secure, and it looks like the only Stripe does
We used https://www.cardinalcommerce.com/ to implement 3D Secure. We had to develop a plugin using their API. Took us about 2 months to develop and implement. Cardinal Commerce is owned by VISA so they know what they are doing in the 3D Secure space.
Here is the link for WordPress Plugin: https://wordpress.org/plugins/cardinalcommerce-oneconnect/
Not sure about Shopify.
Stripe on Shopify Moneris on Woo both in 3D. Something about square ain’t right! They have So much stock $ yet not enough versatility
If you’re getting so many chargebacks that you need to warn your customers, you’re doing something wrong.
Before you get defensive, I’ve been selling online for a very long time, and I get maybe one a year, and it’s generally when someone’s credit card is stolen and used fraudulently on my site. I also used to work for a company that offered credit card processing in high-risk categories. Those included sites with a high rate of chargebacks, including adult websites, online gaming, subscription services, etc.
The wife would see a charge on a statement, the husband would deny charge – chargeback.
A gambler would gamble, lose, regret the loss – chargeback.
A buyer would buy a gift box, didn’t read the fine print, get billed for a second month – chargeback.
Something about your business makes it prone to chargebacks. My guess, based on nothing, but the mention of “gurus,” is that you’re dropshipping out of China and the product is poor quality and the shipping times much too long.
That might not be it, but there’s something. Find what it is, fix it, and problem-solving.
I completely disagree. I ran an enterprise-level Jewelry site and we had a huge rate of chargebacks when I started. Many people are scamming this way now. We used signified and that sort of helped, but I then implemented bolt, which really helped as it blocked bots/hackers/etc.
but we would get hit with 20 – 50 transaction fraud attempts at a time, on a normal day.
It helps to add 3d card verify and all that other ip block stuff on top of Signifyd, perhaps you already tried this. The signified fee hurts too!
But wow 20-50 sounds like someone has a vendetta against you :(. Best of luck broski.
Certain industries are more prone to chargebacks and attractive to those with stolen cards jewelry or anything really high ticket especially.
We are also selling jewelry. Our average ticket is $378. When we started, we made to order and had a long wait time. Zero fraud. We are now capable of near-immediate fulfillment but still promise the longer delivery time. Still not a single chargeback or fraudulent purchase in five years of operation. Time is our friend.
Most of the fraud I’ve seen is from organized crime buying large numbers of stolen cards and using them for high-end goods that they turn into profit. Hackers sell thousands of card numbers at a time, for like a buck apiece.
The fraudsters hire unaware people to receive orders and reship the product, that the fence. They buy expensive stuff like jewelry, which would fit your experience. You sure they were scammers and not fraudsters?
Yes, some were fraudsters, some were scammers. I would say 70% of the customers claimed that they didn’t get their packages, meanwhile, I had delivery signatures through UPS. There are plenty of people who have issues with their products/don’t want to pay for it, so claim their card was stolen, or they didn’t get it, and they don’t think twice about submitting CBs. Many are full of shit, in my experience, but this was a young clientele and they would never reach out, just call their CC company or bank.
I get ya! And btw I HATE drop shipping u can see my post history. I frickin hand qaqc our product b.c our faces r behind the brand, we have to compete for w drop shippers on price and established businesses on quality and I’m still learning.
our demo is just cheap and humans are nasty on the internet. I shoulda mentioned that this does not scale well, but either does shaving 1-2% off total revenue imho.
Like we got maybe 2 chargebacks in 1 year off 1.5k orders. Now it sounds like I’m pity but I do enjoy scaring/threatening those 2 scammers lol
Like we got maybe 2 chargebacks in 1 year off 1.5k orders.
Ahh, okay. I assumed you were getting them constantly. lol
In our case most of our chargebacks originate from our ALL SALES ARE FINAL policy and/or unrealistic expectations from the customer. Every store is different so you can’t really say the reason you get too many chargebacks is that you are doing something wrong. Friendly Fraud is wrong no matter how you paint it.