Fraudulent Customers - Action to take

[Guy Incognito]

We've got someone trying to defraud our business.

Placed 6 orders, all marked as high risk by our system so we waited for funds to hit our account before dispatching. It's not unusual for us to get multiple orders in quick succession but the nature of them did make me more suspicious.

All delivered and signed for, now the client has opened chargebacks on all of them. To add to the mix, we also received a further chargeback today from a different person at the same address.

We have a total of 8 chargebacks opened this year out of over 5,000 orders. They're all from the same address.

So, obviously we've submitted evidence with proof of delivery etc, but if - somehow - the banks rule in their favour, do we go down the small claims route? Or report to police? Amount involved is circa £7,000.

We have now blacklisted the postcode and address for the future.

 

[The Byre]

I would put the bank on notice that a chargeback would mean that they are aiding and abetting a criminal. Get a solicitor to write the relevant letter - that way, the bank will sit up and take notice and take the matter seriously.

And yes, report it to the police. They won't do anything, but you should insist on an incident number etc. The people involved are probably known to their local police anyway.

 

[tony84]

Cant you report it to Action fraud or national crime agency?

 

[Guy Incognito]

Thanks for the advice - have reported it through Action Fraud and got a crime reference. Updated this on the chargeback submissions. Will update when I have a response.

 

[MBE2017]

Hope things go your way. What kind of item does this involve? Just wondering if it was possible to show receipt, often these toe rags post on social media etc but with the amount you are looking at, most likely professionals.

Had a customer claim a lampshade had never been received a few years back, the wife checked on Facebook and low and behold the client had posted about their lovely new lampshade, from my company.

I took a screenshot and sent a new bill, along with 24hr notice to involve the Police, they paid within 5 minutes.

 

[Alison Moore]

It's great that you've reported it, and its definitely worth it.. although it might seem that the police aren't doing anything, on the larger cases they do. We've had a couple of incidences where we've had to supply evidence to the police with resulted in the people being charged.

 

[busowner987]

Scum pal. If local enough I would drive round. Likely nobody living there though. I remember few years back the Mrs sold the little ones moncler jacket on ebay. The person done a charge back on card and they was only round the corner so I shot round there.

turns out the couple had split up and ex boyfriend had done charge back on all the items the girlfriend had bought.

I offered the option to return item or pay again and she did pay again.

Sometime a genuine reason but obviously yours is fraud. The thing is if the card is 'stolen' that money will be coming back.

I learned in a previous lesson never to take phone payments when we was sending goods out.

 

[AlanJ1]

I learned in a previous lesson never to take phone payments when we was sending goods out.

Genuinely curious on this, we have fraud like everyone else but have never ever had one on a phone payment spanning over years, it's always website orders.

 

[Guy Incognito]

These were all website payments, which were flagged as suspicious hence why we delayed dispatch until the funds landed in our account.

We're fortunate in that we can still carry on and it won't have too much of an impact on day to day operations, but obviously we're not going to let £7,000 go without a fight and for some businesses the money being withheld from them would put them out of business. I think they messed up by using another person at the same address, it makes the fraud more obvious.

Hopefully updating the crime reference number into the chargeback responses (along with the tracking numbers and proof of deliveries) will ensure it goes in our favour.

 

[Red Wood]

Cant you report it to Action fraud or national crime agency?

Action fraud are a joke shop

 

[Red Wood]

Genuinely curious on this, we have fraud like everyone else but have never ever had one on a phone payment spanning over years, it's always website orders.

I am in an industry where the products we distribute are made up of valuable raw products that can be easily scrapped.

Deal with at least 1 attempt a week. Payment by credit card, first order, newish company - Jog on mate. Probably stolen CC #

Also the good old; Form a ltd company, post fake account after year one then attempt to get company credit. The scary things is with larger companies it usually falls through the net and works, fortunately for us we are small enough to spot a dodgy one and do our due diligence.

 

[Guy Incognito]

I do feel a bit foolish, I sensed something was wrong due to the mix of items ordered so should have followed my hunch but after funds cleared I assumed it was genuine.

We don't offer credit terms (to trade or anyone) which means we don't have issues with invoices. I have had people ask for VAT invoices before delivery which always strikes me as suspicious.

Fingers crossed we get the money back. We've also emailed the person and told them we've reported to the police.

 

[Dimo]

Action fraud are a joke shop

Yes. Aside from providing a crime number they will do absolutely nothing. Guaranteed.

 

[Mr D]

I do feel a bit foolish, I sensed something was wrong due to the mix of items ordered so should have followed my hunch but after funds cleared I assumed it was genuine.

We don't offer credit terms (to trade or anyone) which means we don't have issues with invoices. I have had people ask for VAT invoices before delivery which always strikes me as suspicious.

Fingers crossed we get the money back. We've also emailed the person and told them we've reported to the police.

Never known action fraud to do anything - times have had to report stuff to them have had to get money back from other sources instead.

 

[Ray272]

So you accepted 6 orders totalling 7k to the same address. Sounds like your issue is closer to home.

 

[Guy Incognito]

So you accepted 6 orders totalling 7k to the same address. Sounds like your issue is closer to home.

We have a very high repeat order rate and our AOV is approx £850. It’s not that unusual. We’ve got multiple clients who place orders in excess of £1,000 repeatedly. Only the mix of items seemed a little odd but that is down to personal choice.

As it was flagged by our system we held dispatch until funds had cleared.

What else can we do? We had the money cleared into our account. We can’t just keep the money and not deliver something!

 

[MikeCC]

Sorry to hear you've been done. If we get an "interesting" order, we phone them to sound them out with some pretext like a stock shortage or checking delivery address. Google street view is handy as well.
Getting card funds into your account is no indicator for fraud unfortunately. In some cases, we have voided the card transaction on the day to avoid lost fees (you don't pay until processed). Or even just refund later and take the fees hit. A genuine customer might be annoyed but will understand when you contact them and probably go again. You won't hear back from a fraudster.

 

[Lisa Thomas]

I haven't read all the replies so sorry if I am repeating something but action fraud are only interested in claims, or cumulative claims for over £100k.

 

[Red Wood]

I haven't read all the replies so sorry if I am repeating something but action fraud are only interested in claims, or cumulative claims for over £100k.

They may say they are Interested in claims over £100K, but I can assure you they are not, even remotely.

 

[Bob Morgan]

"Fraudulent Customers - Action to take?" - I know a little man in Fulham!

 

[alan1302]

They may say they are Interested in claims over £100K, but I can assure you they are not, even remotely.

What makes you say that?

 

[Red Wood]

What makes you say that?

Personal experience.

 

[alan1302]

Personal experience.

Care to expand any?

 

[Gordon - Commercial Finance]

Personal experience.

An individual personal experience? Or did you work at Action Fraud and therefore have data about multiple cases to make a reasonable judgment about what they do in general?

 

[busowner987]

@AlanJ1

The bad orders we used to get were always done over the phone so they didn't have to do the last 3 digits on the back - 3D secure I think they called it.

Our virtual terminal at the time did not require it. We then switched to online payments only. We only posted out to the card holders registered address.

 

[Red Wood]

Care to expand any?

We were involved in a very elaborate invoice scam couple of years back from one of our regular manufacturers in Poland. Long story short, their email was compromised, bank details change request made from their accounts on official paperwork, from an official email. New bank account details were from the same bank (ING) and the same account name. The payment was made, then a colleague a couple of days later noticed a small inconsistency in their email (thank god).

I got involved, straight to our bank (although they requested to reverse the transfer with the receiving bank it has already been sent). Action fraud took details and did nothing (didnt even hear back after we updated them with the full case). Police did nothing other than a report. It was only due to me speaking to a senior executive at ING HQ in Amsterdam that we were able to intercept the money. They quickly confirmed the bank account was fraudulent and it was blocked. The supplier although sympathetic was little help as we had been speaking with the fraudsters for almost 3 weeks so they had no idea of the recent order. Although it was due to their weakness in their security systems our details were used (along with others it transpired)

Got the funds back, still in touch with that ING guy to this day. Sent him and his family a big gift at the end of it all as if it wasn't for him, we would of lost upwards of 6 figures, would of put us under.

On the positive side, lessons were learned.

Another reason action fraud is useless. As mentioned above, due to our industry scammers are always trying to defraud us for the raw materials. We used to report every one of them, full details of director names, addresses and proof; nothing... We don't bother anymore.

 

[Steve_g]

Who processed the payment? Do you have liability shift? Didn’t the transactions pass though 3DS? Did they pass AVS? (shopped to the cards registered address)

liability shift if very important, if you processed the payments using 3DS then liability is usually shifted to the card issuer and you will likely win with a simply proof of dispatch, If not then the liability is on you and (assuming) the chargeback reason code is for unauthorised payment you will be liable regales if proof of delivery and any legal action you take to reclaim the funds form the victim of fraud (the card account holder) will not hold up in any way.

 

[Red Wood]

CDS? It was a BACS transfer, so there lay the problem.

 

[Steve_g]

BACS, as in a standard bank transfer? That’s not possible. You can’t put a chargeback on a BACS payment.
Chargebacks are only for credit and some debit cards.

 

[Guy Incognito]

Not a BACS payment. It was direct through our website (Shopify) through Stripe. Requires the 3 digits on the back of card and all that.

We get incredibly few chargeback attempts - I think it is something like 15 out of 10,000+ orders.

I will update when we get the response from the bank. I have put them on notice that legal action will follow if they side with the fraudulent customer.

 

[Steve_g]

Stripe does support 3DS but we had to jump though hoops to get it working. But it does offer some good review features, we used to have it so that if the AVS didn't match (billing vs shipping address) we would manually review.

If Shopify support it I would recommend Braintree, they will match your Strip charges and supports 3DS out of the box.

May have just been for us but once we started getting chargebacks they all started rolling in, like we go put on a sucker list so watch out.

Just a word of caution, don't expect anything to come from legal action, its most likely that the chargeback came from a legitimate case of fraud (customers card was compromised) and unless you have supporting evidence (like it being delivered and signed for at the address that the customer lives at that matches the cards register address) you wont stand a chance, without 3D Secure you are liable.

We once had a chargeback of over £1000 from a customer who's girlfriend who lived 1 mile from him and issued a charge back on an order he had made using her card to his address, despite offering all evidence to the bank that they were linked and made a false claim they were unable to do anything, we were advised by our solicitors that it would cost too much to reclaim the money.

I wish you luck, its defiantly worth getting on top of your security early on - I learned the hard way (about 40k chargebacks over a 2 month period a few years ago)

 

[Guy Incognito]

We have signed proof of delivery (from the person in question) and email correspondence with the person confirming receipt of items and enquiring why there was a short delay in dispatching.

We will be straight to small claims court if the bank rule in his favour. We have verified contact details.

We've IP / postcode banned the address as well.

 

[MikeCC]

So do you have 3D security setup for card payments? Not just the basic 3 digits on the back but where the transaction has to pass card issuer security, sometimes with password or a texted passcode. The transaction record should show AAV/UCAF details.
Also it's not clear whether the goods were delivered to the cardholder's account address?
If neither of those applies here, you're probably on the hook.