What can sellers do to protect themselves from fraud?

[allthingsgifts]

Just wondering what people do to try and prevent fraud when selling online? as it seems that anyone can buy something online and say they didn't authorise the transaction because they didn't type a pin number in and get there money back, this is my understanding after speaking with Protx but maybe it's only for non-uk transactions. Plus what's stopping people ordering say 4 or 5 items and saying i didn't send one and i know i 100% did. It just seems that it's too easy for people to rip each other off online.
Lianne

[SillyJokes]

Lianne, you learn to spot fraudulent orders, you make checks on those you suspect and you try not to sell anything that fraudsters want or can sell on.

You could try only sending goods to the checked registered billing address, but this has it's own problems when people are out at work all day.

You can always refuse to take an order and issue a refund if you are suspicious.

You will get caught out from time to time, but as an online store, at least you don't get shop lifters.

[GeekSRV]

Best thing is to send everything by recorded delivery - If a signature is present how can they claim they didn't get the goods at that address? I know it's not 100% guaranteed but it show's you've lived upto your side of the deal.

[lesliedocherty]

What if Mickey Mouse or Donald Duck signed for it, that wont help much

[allthingsgifts]

Hi Silly
I had a chargeback recently on an order, it was low value and just a couple of soft toys. Went through protx as low risk, the guy was in the US, ip was in the US but wanted to ship to a friend in Thailand, i even emailed him (the email address was the guy in the US's name) to confirm delivery address and he replied. 2 months later a chargeback was done and because it was a non-uk card i couldn't do anything. Just had someone say i didn't send them an item in a 4 piece order when i did and is now threatening trading standards so i don't have a choice i have to send out another item even though they are lying and already have it with the rest of the order. Just seems everything is on the buyers side. I've removed a lot of countries from my ship to list now so hopefully won't get caught again. I guess one chargeback in just over 2 years is probably quite good.
Lianne

[GeekSRV]

What if Mickey Mouse or Donald Duck signed for it, that wont help much

Well it show's it turned up at the location. Like I said it's not perfect - bar hand delivering and taking a photo of yourself handing the goods over with there passport present it's about as good as you can get.

[willitbe]

We get chargebacks at the rate of 1 every 2 months, sign of the times i'm afraid

[sysops]

Best thing is to send everything by recorded delivery - If a signature is present how can they claim they didn't get the goods at that address?


Hahaha!

1. It wasn't me who signed
2. I got the box, but it was empty
3. I got the box, but it only had 2 of the 5 items

Signature means absolutely nothing.

[gamer1810]

There are a number of things that you can do to reduce the risk. Only sending to the billing address is one, but as someone has already pointed out, its not always practical..

With regard to non delivery (or claimed non delivery!). If A recorded item had been signed Donald Duck, it doesnt matter, you have proof i was delivered to that address. Alternatively, if that wasnt accepted, I would go back to Royal Mail and demand compensation, given that thier postman allowed the reciept to be signed in this way.

Also, we dont send things out recorded as most of what we send can fit through a letter box. When customers say they havent recieved something, we get them to complete whats called a Royal Mail Denial of Reciept Letter (P91), Royal Mail then accept this as proof of non delivery and compensate us. You will need to be able to supply proof of cost ie suppliers invoices and proof of despatch ie mailing docket for that day.

[Page]

It is not so much a question of preventing as reducing it to alevel that is acceptable as a business cost. As opposed to moarally acceptable, annoying though that may be.

There are these costs for all businesses. As someone has said there is shoplifting. There is also staff theft. There is still some credit card fraud, dud notes, returned good bought from elsewhere and on it goes.

The higher the value of goods the more hoops you often have to jump through. This can put buyers off but if overall the money saved is higher than the lost profits due to people not wanting to jump those hoops then it is worth doing.

[SillyJokes]

Shipping to Thailand, an absolute classic fraud I'm afraid. Don't ship to the Far East with the exception of Hong Kong and Japan. Never accept orders from one country to another outside the UK. I would think Protx would give you a list of countries not to send to, I know WorldPay have a list.

It sounds like you have a very low chargeback rate in actual fact. The first one bites the most and keeps you awake at night wondering how you would do the murder should you be able to get your hands on the culprit. In reality you are better to spend your energy on other things. If at the end of the mont hyou are still in profit dispite the chargeback you are still a winner.

You will get better and better at spotting them.

Don't send anything to Thailand and that goes for all you new small ecommerce sites out there. If I had a £1 for every site who I personally know that lost money sending goods there, I'd probably have paid for my own bitter experience.

[streetslocal]

We telephone all of our customers and verify there orders and at that point ask them to confirm the last 4 digits on the card and there card billing address.

[quikshop]

Hi Silly
I had a chargeback recently on an order, it was low value and just a couple of soft toys. Went through protx as low risk, the guy was in the US, ip was in the US but wanted to ship to a friend in Thailand, i even emailed him

Don't ship to Thailand or anywhere else in Asia, Africa, Middle East, Eastern Europe, South America and only send orders to the States if the shipping and billing addresses are the same.

Sounds like you could be losing out on a whole lot of business but in reality the UK, mainland European and US markets are plenty big enough without risking high-risk zones.

For orders of high value phone the customer on the basis of a 'customer services' call to ask them to confirm their order and address at which their card is registered.

Insist on landline telephone numbers during checkout (or registration) rather than mobiles.

We've an article here on fraud prevention (http://www.internetretailer.biz/partner/fraud_prevention.aspx?qsaid=192) that covers a few other techniques that should reduce your fraud by up to 95%.

Sadly the other 5% will be attempted by gangs with rented UK addresses, perhaps a perp on the inside of the Royal Mail (we've had direct experience of that more than once) and will require a sense born out of experience whether or not you think there might be a risk with this one.

And of course the banks stack chargebacks against distance sellers so when you do post high order values out, use a courier who provide full tracking of your parcel from collection to delivery. Oh, and avoid Paypal if you really want to avoid undefendable chargebacks.

[allthingsgifts]

Hi Everyone
Thanks for your advice. Someone in the US just bought a couple of bits and wants to send it to a uni student in Taiwan, as the email addresses were different i emailed the paypal account holder to check to see if this was ok and she replied saying she's sending the items as a gift and has paid for signed for, but if a chargeback happens then i'm not covered i don't think as i didn't send it to the US?
Just narrowing down my list of countries to ship to, what about any of these? Which should i keep?
Belarus
China
Brazil
cyprus
croatia
Japan
Hong Kong
Malaysia
Malta
Mexico
Poland
Portugal
Reunion
Singapore
Slovenia
South Africa
Taiwan
Thailand
Turkey
United Arab Emirates

Regards
Lianne

[allthingsgifts]

Hi Quick
Just read your article, thanks, so do you think it's worth having something on the site saying they agree to terms and conditions, would i be covered against chargebacks for that eventhough it's not a physical signature?
Regards
Lianne

[quikshop]

Hi Lianne,

Yes although a compulsory tick does not protect you against fraud and will not prevent erroneous chargebacks.

Even selling into the designer fashion market which along with white goods are prime targets for criminals, once we'd applied the techniques dicussed in our article linked to in my previous post AND dropped PayPal, we filtered out nearly all fraudulent order attempts.

[sysops]

We telephone all of our customers and verify there orders and at that point ask them to confirm the last 4 digits on the card and there card billing address.

That's crazy. It doesn't scale at all. It can only work if your average order value is over say £100. At small order values, the cost is just way too high.

[davidjgoss87]

To stop card fraud, 3dsecure (verified by visa and mastercard securecode) is a big help, so if someone has successfully been validated on 3dsecure you can be virtually certain they are genuine. The problem comes when you get an order that hasn't gone through 3dsecure and has a different delivery address to the cardholder billing address. At this point you have to be smart:

- Is there a home telephone number given that matches the area?
- Does the email address have the person's name in?
- Is the email address a work address for a genuine company?
- How far is the delivery address from the billing address?
- What goods have been ordered?

Once you look at all these things you can build a picture of whether the order looks genuine. If more than one of the questions above has a dubious answer, then write a letter to the billing address asking the cardholder to phone or email quoting a reference number to clarify that they have placed the order. Most people will be fairly happy about this, because you are actively trying to weed out potential fraud against them.

As for the issues of customers being dishonest - what can you do? Don't sell to them again I suppose.

[davidjgoss87]

We telephone all of our customers and verify there orders and at that point ask them to confirm the last 4 digits on the card and there card billing address.

Sorry to be blunt, but what does that achieve. If someone has placed a fraudulent order with an innocent person's details, they will already have the billing address and card number as they would have had to enter them in to place the order. As for the phone number, if a fraudster has placed the order then it's only going to be them answering the phone.

You have to write to the billing address - that's the only way to guarantee you are communicating with the actual cardholder either way.

[juliewoo]

We telephone all of our customers and verify there orders and at that point ask them to confirm the last 4 digits on the card and there card billing address.


I have just posted a similar thread to this about billing/shipping addresses in the eCommerce section

The problem we face is annoying the geniune customers here! only shipping to the billing address can be a sticky subject for customers spending a lot of money!

Also.. on the flipside - with fraud - if it is a stolen card, and you call requesting the security code and billing address they will still easily be able to provide these details for you over the phone.

There doesn't seem to be a fixed way of weeding the fraud out!

agh!

[allthingsgifts]

Hi
Could someone let me know whether it's ok to ship to these countries as I want to get my ship to list correct before it picks up for xmas.

Belarus
China
Brazil
cyprus
croatia
Japan
Hong Kong
Malaysia
Malta
Mexico
Poland
Portugal
Reunion
Singapore
Slovenia
South Africa
Taiwan
Thailand
Turkey
United Arab Emirates

Regards
Lianne

[quikshop]

Don't ship to Thailand or anywhere else in Asia, Africa, Middle East, Eastern Europe, South America and only send orders to the States if the shipping and billing addresses are the same.

Or to put another way, only ship to the UK, Ireland, mainland (old) Europe and the States with the conditions mentioned earlier.

[allthingsgifts]

Hi
Thanks quickshop, geography wasn't one of my strongest points at school, could you just ** the ones in my list which i should keep or delete which ever list is shorter, all the others not listed i have either removed or kept like france, spain etc. undecided on the ones i listed.
Thanks
Lianne

[wood1e2]

All of them apart from 'Portugal' although some are not as bad as others on your list. But better being safe than sorry...

[SillyJokes]

Belarus NO
China nO
Brazil NO
cyprus YES
croatia NO
Japan yES
Hong Kong YES - BUT CHECK ADDRESS - some very wealthy areas who spend big bucks honestly
Malaysia NO - often try to get round ban by pretending to be Australian.
Malta yES, BUT THE POST can be very slow. Everytime I answer an email about missing parcels I think I should remove this one from the list.
Mexico NO
Poland nO - but getting better
Portugal yES - but they don't order much anyway.
Reunion WHERE?
Singapore NOT REALLY
Slovenia no
South Africa no
Taiwan no
Thailand no
Turkey No
United Arab Emirates NO - Partly due to their annoying habit of only doing 1kg packages which causes problems.

Also, look out for orders to forwarding companies in the UK like Aramex House - these can be used for cover for fraudsters. Although if anyone else has a comment on this I'd like to hear them.

[allthingsgifts]

Thanks silly. I've sent one to 'Aramex House' before thought it was like a PO Box, they paid for special delivery, so sent it but they put it in the wrong box, sorted it in the end but wasn't fraud - touch wood! was last year time i think.
Lianne

[sysops]

Also, look out for orders to forwarding companies in the UK like Aramex House - these can be used for cover for fraudsters. Although if anyone else has a comment on this I'd like to hear them.

We send quite a few to Aramex, and have several repeat customers who use them. We haven't had a fraudulent order through them yet.

On the plus side, order values are high (10x average order value is not unusual), and returns are zero (they just can't be bothered).

On the minus side it is more risky, and could easily be used by fraudsters. Also they will remove prohibited items from the order (liquids, food etc) without telling you or the customer, so you need to error out those orders and filter their content.

Talking to Aramex House, it seems they are primarily used by wealthy people from the Saudi & Dubai.

[allthingsgifts]

Hi
Does anyone have a copy of a letter that they actually send out to the billing address to check that they authorised the transaction as i don't really know what to say but i guess they need to sign it and send it back to me. Would this be enough to counter a chargeback? I wouldn't copy it word for word just need some ideas of what to write. Thanks for any help
Thanks
Lianne

[streetslocal]

We use www.transx.co.uk and they send the letter directly upon order.

[deniser]

Belarus NO
China nO
Brazil NO
cyprus YES
croatia NO
Japan yES
Hong Kong YES - BUT CHECK ADDRESS - some very wealthy areas who spend big bucks honestly
Malaysia NO - often try to get round ban by pretending to be Australian.
Malta yES, BUT THE POST can be very slow. Everytime I answer an email about missing parcels I think I should remove this one from the list.
Mexico NO
Poland nO - but getting better
Portugal yES - but they don't order much anyway.
Reunion WHERE?
Singapore NOT REALLY
Slovenia no
South Africa no
Taiwan no
Thailand no
Turkey No
United Arab Emirates NO - Partly due to their annoying habit of only doing 1kg packages which causes problems.

Also, look out for orders to forwarding companies in the UK like Aramex House - these can be used for cover for fraudsters. Although if anyone else has a comment on this I'd like to hear them.

I agree entirely with the above list except would say yes to Singapore, expats in United Arab Emirates (the locals tend to use the Aramex House address) and Turkey if the value of the order is not high.

I also have never had a problem with fraud via Aramex House although have turned away genuine transactions because they looked suspicious - but after a bit of correspondence, allowed them through.

[deniser]

Hi
Does anyone have a copy of a letter that they actually send out to the billing address to check that they authorised the transaction as i don't really know what to say but i guess they need to sign it and send it back to me. Would this be enough to counter a chargeback? I wouldn't copy it word for word just need some ideas of what to write. Thanks for any help
Thanks
Lianne

My letter goes something like this:

"Dear

I am writing to you in connection with your order from www....... as part of our fraud screening process. I enclose a copy of the order which has been placed on our system today.

As the shipping address differs from the address you have registered with Paypal, I should be grateful if you would kindly telephone me on ..... to confirm that you have indeed placed the order and that it may be despatched.

I apologise for any inconvenience caused.

YS"

I send this letter when I am suspicious eg. registered address in Scotland but delivery to council estate in south London.

It invariably results in either an old lady not understanding what is going on or someone very grateful ready to report the matter to the police, but both confirming the order has nothing to do with them.

[iancushion]

Hi

SecureTrading have just launched two new counter-fraud services that will help you greatly reduce thr threat of fraud to your business. The first is SecureTrading Identity Check which enables you to do full KYC checks on any or all of your transactions, proving the person exists and lives where they say they do as well as enabling credit reference and mortality checks.

The second is SecureTrading Fraud Score, which is a risk assessment based on the shoppers IP address, card BIN range and delivery address. Please have a look at securetrading.com for more information

[norwichchris]

on the paypal website it states that users should:

check the users reputation
be wary of suspicious requests such as sending to another website

you could ban users with less than 5 negative feedback.
there will always be a risk in transactions online

you should also run security sweeps in case of malware

[norwichchris]

Hi I am new to this forum and would welcome some help.

I am writing a dissertation on PayPal and requre a questionnaire to be filled in i plan to host the questionnaire tonight hopefully after i have 15 responses im on 12 at the moment.

how many people would be interested

any help would be much appreciated

[Gate2Shop]

Go with a company with good fraud protectiong and a guarantee.

[allthingsgifts]

thanks for the replies, Sent out a letter on one order and received it back today signed so am going to send out the order. Spoke to protx and there is no way to be 100% pretected against fraud as even having the 3d secure thing isn't bullet proof they said. reduced my list of countries i ship to and now keep getting emails asking why i don't ship to their country. had a few high risk orders over the last couple of weeks, people must be trying it on to get some free xmas presents! but apparently the police aren't interested in the fraudulent orders being made online so when is someone going to come up with something to stop them. Why can't there be a sort of pin number thing for online orders.

[SillyJokes]

but apparently the police aren't interested in the fraudulent orders being made online so when is someone going to come up with something to stop them. Why can't there be a sort of pin number thing for online orders.

because while individual scattered merchants continue to pay for it, no one else is interested in fixing it.

You will get the emails asking why you don't ship to their country. We do too.

[taggingsupplies]

Hi All

I sent an item and the buyer from USA Said:

It was not in envelope mate.

I said: Sorry i must of forgotten to put it in the envelope Sir.

I said: Did the envelope arrive in Okay condition?

He Said: YES

I said: Thats strange as the envelope weighed 19g and thats what it weighs with the little item, letter and business card.

The Royal mail receipt said on it: 19g

The case was closed

So folks Please remember 2 things:

Weigh your item after it being sealed and write it on the box and keep the receipt.

And if this is a major problem Simply set up a 24hour CCTV recording all packages being prepared and packaged.:)

[IridiumCorp]

Common Sense is your biggest protection against fraud. All the other bells and whistles are just that. Rule of thumb is if there is any doubt just do not send it. Plenty more sales to be had.

[edmondscommerce]

yes building up instincts over time is the best protection - but unfortunately there can be a painful learning curve

remember if it seems too good to be true then maybe it is..

(wow we sold all of our stock of that expensive item we never sell in one single order!)