This is always a hot topic.
It is definitely exciting to be getting such great input through the new 2Checkout forum.
Topics like consumer fraud will be introduced, covered, reintroduced and covered again and again. The short (and often unacceptable answer) is that there really isn’t an ideal solution for the card-not-present merchant of today regardless of product type: tangible or intangible.
Why not? There are two big reasons:
The first is that US Legislation has historically been written to protect the consumer from big, bad corporations. With the recent success of political lobby organizations this trend has begun to shift but, as of today, there really isn’t a good solution in site. We dislike consumer fraud as much as you do. We also strive to make our voice (and, subsequently, yours) heard by participating in a number of merchant organizations who do nothing except lobby the credit card associations and major-league processors to consider change.
A second reason is that card-issuing banks spend a lot of money trying to get credit card customers and they want to keep those customers as happy as possible so they don’t get an account with someone else who give them their money back whenever they call. Oversimplified maybe but also very relevant.
In the meantime, there are steps you can take to protect yourself and to ensure better quality service from 2Checkout.com.
First: If you feel you have been under-served in any manner by a representative of 2Checkout then please submit a ticket directed to a TEAM LEAD or SHIFT MANAGER. Reference your previous ticket, email or the date and time (EST) of your previous interaction and the matter will be investigated. Quite honestly, nothing irritates me more than complaints of poor service from a 2Checkout associate. I am not referring to instances where the information may not be to your liking but you should always feel you’ve received quality care.
Second: If you ship tangible goods always provide us with good tracking information whenever possible as soon as possible. Do not provide fraudulent dates that can and will be given to a customer who contacts us for shipping verification. That is a sure way to get an order refunded and to accrue negative risk markers on your account.
Third: If you ship tangible goods and have a refund policy enter a ticket and request that the policy be appended to your 2Checkout customer service information. Every call or ticket about a product supplied by you will subsequently have this information displayed during the investigation process.
Fourth: If you provide either digital or tangible goods and feel you have a higher than normal number of orders refunded without just cause submit a ticket and request that you be assigned a D.A.R. (dedicated account representative). Include your preference as to the best usual contact time, method and even language and we will review your status and determine if a D.A.R. is warranted on either an interim or long-term basis.
Fifth: Consider legal action. Yes, 2Checkout will consider legal action against an individual who has engaged in fraud but only if the evidence is there for us to use and if the costs of retrieving the purchase price justify legal intervention.
Sixth: Steer customers to new payment methods such as ATM Direct (online PIN-debit), Bill-Me-Later and FxSource (soon to return). New products are entering the marketplace primarily because the traditional payment methods are weighted so heavily in the consumers favor (not to mention interchange increases!). The first two products are directed to the US consumer. The latter is an option for the international consumer. All have much more labor-intensive processes in place to help guarantee that a customer was truly compromised. Consider some discount or upgrade options for customers who use these methods.
This is a topic that encourages frustration on all sides. 2Checkout is responsible for ensuring that our vendors are provided with a valuable service and with guaranteeing that consumers want to shop from 2Checkout suppliers. Our processors and the associations require us to keep chargeback utilization at acceptable levels. The associations haven’t taken steps to utilize non-traditional information in chargeback disputes. Vendors often are not provided with sufficient opportunity to rebut a consumers allegations. We’re working hard and are open to (almost) any suggestions you may have on how to handle our role of middle man better. Sorry, but “don’t issue refunds without authorization” isn’t going to make it very far up the ladder.
I’ll encourage our Risk Department to come up with an article of tips and tricks to help reduce the impact of consumer fraud.
In the meantime, please feel free to offer up your constructive criticism and we’ll be listening and responding. There are a great many terrific feature offerings coming very, very soon and we want your ideas to strengthen and improve our existing offerings while they are in development.
Thanks!
2 Comments »
+0
-1
Very well written…
Unfortunately, online payment remains a major area of Internet immaturity. Payment and data transfer security are allied problems. When buyer and seller meet physically to exchange money for goods, trust is less of an issue than when two entities deal blind online.
Physical presence offers security based on a customer signature and card imprint. But the merchant is almost always responsible for losses when sales are made on a ‘Cardholder Not Present’ basis even when the vendor has obtained authorization from the card issuer.
As an online vendor, your exposure to credit card fraud depends to a large extent on what you’re selling. Intangibles are the easiest target. Top of the list by far are adult sex sites. Since these are prohibited by 2CO, this shouldn’t be an issue for any of you. However, as stated, intangibles are high risk, regardless of the service being sold.
Software sales, instant downloads, gambling sites, informational sites, instant ebooks, web-hosting, among others are equally at risk. Indeed, we try to avoid orders from free email account holders or overseas customers, with obvious IP/billing address discrepancies. Microsoft’s Expedia set aside $6 million for credit card fraud in 1999 but most online retailers refuse to divulge fraud figures for fear of losing customer confidence.
Large ticket item sales are just as risky. For example, many online retailers now refuse to accept orders with different billing and delivery addresses, which 2CO closely monitors as well. However, even this doesn’t help if someone is prepared to set up fake credit card accounts using empty house addresses - and there are criminal organizations exploiting the weaknesses of the credit card system in this and other ways.
It’s a problem which can only get worse without a change to a more secure online payment system which both proves the identity of both parties and cannot be repudiated. Both sellers and buyers must have confidence in online sales. If online sales don’t become more secure vendors will either insist on payment up front or become uneconomic as their increased sales costs penalize their customers for buying online.
Here are some Anti-Fraud Tips For Online Vendors, many of which the 2CO Fraud Team frequently use:
1. Even though it might be a hassle, insist on a mailing address, zip or postal code and phone number of the buyer and then check them out to ensure they aren’t fake.
2. If you can’t contact the buyer by phone or the phone number is unreachable, then don’t process the order
3. Use Address Verification services where they’re available
4. Be aware of the high risk or high fraud countries.
5. Check the email address against the name on the credit card. If the real name doesn’t match the email name then you definitely want more reassurance before processing the order.
6. Refuse to process orders from free email domains unless you have incontrovertible proof of the buyer’s identity.
7. Never ship products to postal box numbers. Always insist on a physical shipping address.
8. Check the DNS table of the remote IP of the customer. Find out the remote server’s geographic area and check it against the address of the customer. Few people connect to the Net using a long distance call. You also need to check the mailing address, phone number and email address of the server, though thieves can also set up servers too.
9. Be especially careful of those wanting higher priced fast delivery or otherwise being price insensitive. Thieves don’t care how much it costs as they don’t plan to pay.
+0
-0
Another way suppliers can cut down on “friendly” fraud, on orders for tangible products, is to require a signature for the delivery. Although you may pay a bit more for shipping, it is much easier for 2Checkout and our suppliers to fight a Bank Assisted Dispute(Chargeback) if there is signed proof of delivery. I am always surprised when suppliers selling tangible items don’t ship via methods that require a signature for the delivery. For a bit more in shipping costs, suppliers are providing themselves with fraud protection. These costs can be recouped through handling charges or slight increases in the costs of the products. As an example, the United States Postal service offers “Signature Confirmation” for $1.75-2.10. UPS offers delivery confirmation through adult signature required from $1.25-3.25.