Chargebacks - Need advice

[TomUK]

Hi,

We've recieved over £2000 of chargebacks within the last 2 months, everytime we've had proof of delivery etc but still the money has been taken.

1) Is small claims court the next step to recovering the goods from the addresses it was sent to? How long is this procedure?

2) What ways to prevent it, smae dlivery address as credit card doesn't seem to matter to the CC companies. Is there any insurance etc or any merchants that protect us?

Regards,
Tom

[Eagle]

And people b*tch that PayPal is unique in this respect... :rolleyes:

If I had proof of delivery, I'd go absolutely mental - keep at them!

Hope you get it sorted. :)

[quikshop]

And people b*tch that PayPal is unique in this respect... :rolleyes:


Not unique, just by far the worst of all mainstream PSPs ;)

That's an awful lot of chargebacks, do you take any precautions before orders are placed, i.e. limiting destination Countries, enforcing the same shipping & billing address for large orders, making customers register landlines and actually calling some who have placed large orders?

[Peter1982]

If anyone has any idea how to get any money orgoods back I would be very very gratefull

We have been taken for over £10000 in the last three months. And I though electrical goods were the only people who suffered from this kind of thing !

[TomUK]

Not unique, just by far the worst of all mainstream PSPs ;)

That's an awful lot of chargebacks, do you take any precautions before orders are placed, i.e. limiting destination Countries, enforcing the same shipping & billing address for large orders, making customers register landlines and actually calling some who have placed large orders?

All have been uk orders, 2/3 have been same billing address and delivery address.

Largest order we have been scammed on is £720, but this isn't an exceptionally large order.

Is the small claims court the way to go? And is anyone aware of any insurance brokers for this sort of fraud.

Regards,
Tom

[Blush]

what do you sell?

[cycloneuk]

Pointless trying to recover the money, chances are the scammers have moved onto another address, what precautions are you using and are you using 3DSecure? Since i turned it on i have had no problems at all, been running fine for 3 weeks now, in 6 months i have had one chargback and i knew it would happen because i spotted it after i sent the order.

[iwebshop]

I am working on a site at the moment, and implementing secure trading payment system on it, he is using it due to the 'extra protection':

http://www.securetrading.com/securetrading-fraud-score.html

he says it saves him thousands.

[Eagle]

Not unique, just by far the worst of all mainstream PSPs ;)Do you have any stats?

[sysops]

We've recieved over £2000 of chargebacks within the last 2 months, everytime we've had proof of delivery etc but still the money has been taken.

While this sounds like a lot, it may not be - what is that as a % of your turnover?


1) Is small claims court the next step to recovering the goods from the addresses it was sent to? How long is this procedure?


No chance.

What do you sell?

[quikshop]

Do you have any stats?

Having used Paypal, Worldpay, Protx and Secpay in the fashion, white goods, sporting goods, hobby and holistic markets I can state without any shadow of a doubt that Paypal are by far, I mean way out ahead, the worst for the volume of fraudulent orders and difficulty in defending against them.

I could also quote the experiences of other 6-figure turnover retailers who have been driven to distraction by how useless Paypal are in comparison when it comes to protecting merchants.

That's not even getting on to the way they treat their customer services as an unnecessary distraction, can suspend an account without explanation and operate outside of the FSA's reach :rolleyes:

[deniser]

The small claims court is a non starter because you need the name of the person to sue and it is unlikely that they will have used a real name. With persuasion the police might go round to the premises and look for the goods (they will do this if the address is known to them in connection with fraud) but you can bet they won't be there. Some addresses are just used to receive goods, they sign with a fake name and the goods are then removed elsewhere. The person at the address will just deny knowing anything about it and claim all sorts of house guests etc.

If any transaction falls outside the strict rules of the Paypal seller protection scheme then you need to screen each transaction individually. Fraudulent transactions are usually very easy to spot and genuine transactions are easy to verify.

[deniser]

I could also quote the experiences of other 6-figure turnover retailers who have been driven to distraction by how useless Paypal are in comparison when it comes to protecting merchants.



Yes agreed, I'm one of them and was so happy the day I switched Paypal off for good!

[sysops]

Yes agreed, I'm one of them and was so happy the day I switched Paypal off for good!

We take around 11% of our transactions (6% by value) through PayPal, and chargebacks are no higher through PayPal than through CC/DC.

Yes, PayPal costs us more in processing fees, but it's an extra mechanism which generates some additional sales.

[Peter1982]

I can't stand Paypal but feel that if we don't have it as an option we would loose some sales.

They hold your money without paying any interest. The fraud risk is higher. It's very easy for customers to claim their money back even when you've sent things in good faith.

It is handy if people haven't got their credit card with them which is the only reason I use it.

[TomUK]

Some of the customers who have filed chargebacks, have used the same delivery address as the address thats registered on the card. With these cases is it possible to go through the small claims court?

PS, the section of the business where this is happening is in online retail. The company sells armour. Charge backs are less then 1% of turnover.

I would really like to know what our options are as someone just blindly stealing from us is a joke, even if we don't get the money, at least recovering the goods.

[sysops]

Some of the customers who have filed chargebacks, have used the same delivery address as the address thats registered on the card. With these cases is it possible to go through the small claims court?

No, because you have no absolute proof of delivery.


PS, the section of the business where this is happening is in online retail. The company sells armour. Charge backs are less then 1% of turnover.


1% isn't that bad, some sectors are far worse (try selling DVD players)


I would really like to know what our options are as someone just blindly stealing from us is a joke, even if we don't get the money, at least recovering the goods.

If you are running a physical shop, you have to expect a certain amount of shoplifting. You work at minimising it, but it never goes away.

If you are running an online shop, you have to expect a certain amount of chargebacks. You work at minimising it, but it never goes away.

In theory, 3DS can protect you from "unauthorised card use" chargebacks, but it won't protect you from "non-recepit of goods" chargebacks.

[TomUK]

I appreciate 1% isn't that bad. I'm asking for general advise on contesting charge backs, systems in place to stop them, and maybe insurance brokers for when they happen.

[sysops]

I appreciate 1% isn't that bad. I'm asking for general advise on contesting charge backs, systems in place to stop them, and maybe insurance brokers for when they happen.

As I said, 3DS will help with some of them, so that's certainly one approach.

Insurance - forget it - the premium will outweigh your losses.

Contesting it - if you get the delivery driver to take a photo of the person receiving the goods, and a copy of their passport at the same time to prove that they are the cardholder, you would have a very good case.

[TomUK]

Thanks, I will look into '3DS', do you have a link to where I could learn more?

[FireFleur]

1% is not bad, as others have said.

It is the problem of distance selling, depending upon what you are doing, you might want to start to think of things you can do to reduce the risk of fraud.

It is not exactly stealing either, you have sent out the goods, it is fraud. You could hold the item until the money clears beyond chargeback, or you could only accept debit cards, or cheques etc.

What we need is a digital currency, that is akin to cash, so once the exchange has occured there is no come back in the exchange system, only in the legal.

Bank transfer is about as close as you can get to digital currency as cash at the moment, but unfortunately most in the UK are not too aware of it. On the continent they are and special relationships exist whereby there is no charge to transfer between accounts in neighbouring countries.

Direct debit cards are sort of similar but still the problem of using the cc networks and the charge associated.

There was someone talking about payment gateways offering this, and whilst that is a step in the right direction, it still puts in an extra middle man who will want a cut.

The banks need to sort this out themselves, and it would be a great idea if they offered special online shopping accounts for people.

Another approach is a little idea of mine I may make into a reality - if you are interested PM me.

[sysops]

Thanks, I will look into '3DS', do you have a link to where I could learn more?

3DS = 3 D Secure, Verified By Visa and Matercard Securecode. You implement it via your payment service provider. Who do you use?

[edmondscommerce]

use an insured courier and contact your customers with an email telling them that their goods have been delivered and that they have to report non delivery within 24 hours

then if its not delivered you are covered by the courier company insurance.

some courier companies do things like note down the colour of the door or some other identifying marker to prove that they went to the house in question..

if your stuff is really not being delivered then your customers have every right to go down the chargeback route

if the stuff has definitely been delivered but you don't have proof then move to a delivery service that gives you the proof you need.

[sysops]

use an insured courier and contact your customers with an email telling them that their goods have been delivered and that they have to report non delivery within 24 hours

then if its not delivered you are covered by the courier company insurance.

some courier companies do things like note down the colour of the door or some other identifying marker to prove that they went to the house in question..

if your stuff is really not being delivered then your customers have every right to go down the chargeback route

if the stuff has definitely been delivered but you don't have proof then move to a delivery service that gives you the proof you need.

You're missing the point. A signature is not sufficient proof to take to court, neither is the colour of the door.

[TomUK]

Ok,

An order for £700 has just been placed. Before it gets sent out, what checks can I make to cover myself from fraudulent activity?

[iwebshop]

Ok,

An order for £700 has just been placed. Before it gets sent out, what checks can I make to cover myself from fraudulent activity?

well the simple checks are, is the delivery address the same as the purchasers address, which country is the order from, if its credit card then did it pass the basic tests? Is there a telephone number to call just to verify the order? need more info to be honest...

[TomUK]

Invoice the same as delivery
UK Order
Not sure what you mean by basic tests, but the payment has gone through
I have a telephone number

The only wierd thing is the name of the person, it's a wierd name, I wouldn't be able to pronounce it.

[Dominic Taylor]

If you use Protx for example, they have a 'Third Man' service which is a little extra box of information that shows up for a transaction. It's been quite useful for us in turning away dodgy orders - it flagged up one transaction as dodgy based on the e-mail address used.

[ServersandSpares]

Hi,

There is a thread in the ecommerce section you might want to read, this was my post on there:

We have a significant amount of fraudulent orders, quite regularly, so like you, I now find them easy to spot. It's quite scary that the processes you have in place don't protect you from fraud due to the loopholes, (ie: verified by visa - extremely easy to get around if somebody is using a stolen card!). Another scam is opening a credit account with a big companies details, which although harder to do is not impossible.

We use Barclays EPDQ, and what is extremely scary is that we can log in to a secure site to check the payment before sending goods, the transaction looks fine, only to be later flagged as fraudulent after end of day banking has been run overnight because although all the security measures are in place, they often don't flag issues depending on the credit card issuer and their particular rules.

We have therefore changed the way we ship items from same day to next day, unless we can verify a customers identity by other means. It hasn't impacted our sales, but it protects us, and our customers.

If you haven't had to deal with these issues, you might not even be aware of them, and a chargeback can drop through the letterbox with no warning.

What is even more despicable is the fact that we had a long run of fraudulent orders, paid by several different credit cards, delvering to the same London Address. We obviously did not ship the goods, but reported this to the London Metropolitan Police after Barclays Fraud Squad confirmed to us the card was reported stolen. They weren't interested as we hadn't shipped the goods, so I phoned crimestoppers, who refused to act because I had given my name and company address and my information had to be anonymous. I gave up at that point, with the realisation that at the end of the day, if you're an online trader, the only person looking after your finances are you so it pays to pester your bank or whoever you use for online payments, to make sure you're up to date with their latest set of rules and loopholes.

Julie