Internet Sellers Please Read - Fraud

[LyndaSandick]

Please Please make your staff aware of Internet fraud using stolen credit card details coming up to Christmas. We have been in business 10 years and had never had any credit card fraud....... until last Christmas when we were targeted. We lost £6,000 before we realised these orders were slipping through. The orders were for between £300 and £1,000. They either buy one expensive items or loads of unrelated items.

You will lose the goods and the money.

The money is paid back to the credit card owner once they realise their card details have been used. It is a chargeback and you can do nothing about it.

Please be vigilant. The police are not interested.

There are gangs out there trying new web sites all the time and we could see a pattern emerging. Once a fraudulent order slips through, they keep on coming. The gangs are obviously working in cummunicardo.

 

[Optegris]

Or you can just take a bit of time and implement 3D secure on your site. This does provide a much greater degree of protection against chargebacks.

 

[bjg123]

Or you can just take a bit of time and implement 3D secure on your site. This does provide a much greater degree of protection against chargebacks.

And lose money through people not using your site.

 

[Astaroth]

And lose money through people not using your site.

Depends on how its implimented - those who have done it well after netting off their chargebacks show no significant reduction in conversion.

Taken a year to post the warning though?

 

[LyndaSandick]

Taken a year to post the warning though?

Not so. Search my original thread in Feb 2010:
Web Site Fraud - Tips to spot it

I am just bringing it to peoples attention again ahead of the Christmas period.

 

[Optegris]

And lose money through people not using your site.

As Dan said, the biggest reason for users abandoning carts using 3D secure is because the site owner hasn't taken the time to integrate it correctly and explain to shoppers the how's and why's...

 

[sysops]

Depends on how its implimented - those who have done it well after netting off their chargebacks show no significant reduction in conversion.

No, it doesn't. 3DS increases abandoned orders, full stop. You can mitigate the increase, but you can never eliminate it.

 

[sysops]

As Dan said, the biggest reason for users abandoning carts using 3D secure is because the site owner hasn't taken the time to integrate it correctly and explain to shoppers the how's and why's...

There speaks someone who hasn't had dozens of calls and emails along the lines of "what the hell is this thing, I've never heard of it".

 

[Optegris]

There speaks someone who hasn't had dozens of calls and emails along the lines of "what the hell is this thing, I've never heard of it".

Correct. I have it implemented on all my sites and have maybe had a dozen calls in total.

 

[sysops]

Correct. I have it implemented on all my sites and have maybe had a dozen calls in total.

Over how many transactions?

What was the total value of the transactions you lost because of it?

What would your fraud loss have been?

We're handling 400-800 transactions a day. 3DS makes a very big dent in sales.

 

[Naughty Vend]

...yes but 3DS is usually used by companies whose processes are wide open or staff lacking in vigilance, it's better not to install it and simply do not send to anything other than the registered card address with underlying policy to contact the buyer via 'self sourced' phone number (i.e. not from the order placed) or letter if the order value exceeds a certain level.

If you stick to these policies the fraudsters will not target you for such low value transactions, it would take them too long to get a return upon their efforts. Find the right policies for your business.

 

[Optegris]

Over how many transactions?

About 2-300 per week

What was the total value of the transactions you lost because of it?

Zero. Mainly because of the way we have implemented 3D secure. If a transaction fails to complete at that stage we pick up the phone to find out why.

What would your fraud loss have been?

Again zero. Using a combination of 3D secure, MaxMind and common sense we have had zero chargebacks in the last 2+ years

We're handling 400-800 transactions a day. 3DS makes a very big dent in sales.

Then it would appear that you need to look again at how you have implemented it.

Look at the end of the day it is there to protect the consumer as well as the merchant. It's not going anywhere and every day consumers are getting more used to it...

 

[Optegris]

...yes but 3DS is usually used by companies whose processes are wide open or staff lacking in vigilance, it's better not to install it and simply do not send to anything other than the registered card address with underlying policy to contact the buyer via 'self sourced' phone number (i.e. not from the order placed) or letter if the order value exceeds a certain level.

If you stick to these policies the fraudsters will not target you for such low value transactions, it would take them too long to get a return upon their efforts. Find the right policies for your business.

You are joking right? Just so I haven't got this wrong, you're saying that 3D is only implemented by people who don't know what they're doing??

 

[sysops]

About 2-300 per week

Zero. Mainly because of the way we have implemented 3D secure. If a transaction fails to complete at that stage we pick up the phone to find out why.

Again zero. Using a combination of 3D secure, MaxMind and common sense we have had zero chargebacks in the last 2+ years

Then it would appear that you need to look again at how you have implemented it.

I don't buy the 'there's a magical way of implementing 3DS that loses you no sales' argument, sorry.

Look at the end of the day it is there to protect the consumer as well as the merchant.

How does it protect the customer?

It's not going anywhere and every day consumers are getting more used to it...

Oh but it will. It's a very poor excuse for a security system, and the replacement is already being specced.

 

[Optegris]

How does it protect the customer?

Granted the protection for the consumer is limited to if a retailer accepts a transaction that has failed 3D secure but if it is rejected based on a 3D failure then the consumer is protected.

Likewise I don't buy the argument that it adversely affects sales.

 

[sysops]

Granted the protection for the consumer is limited to if a retailer accepts a transaction that has failed 3D secure but if it is rejected based on a 3D failure then the consumer is protected.

It doesn't protect the customer at all! In fact:

- Before 3DS, a customer could always get the money back by saying "I didn't place that order"

- With 3DS, the above won't work - even if someone has stolen/guessed your 3DS password

The customer has less protection with 3DS.

It seems you haven't really thought this through.

 

[deniser]

Agree with Sysops.

What products do you sell Openmind?

We have noticed the fraud increasing over the last week. We have new checking systems in place which (fingers crossed) seem to be working and we are picking them up. We have also started reporting them to the police who are actually interested at the moment.

 

[Optegris]

It doesn't protect the customer at all! In fact:

- Before 3DS, a customer could always get the money back by saying "I didn't place that order"

- With 3DS, the above won't work - even if someone has stolen/guessed your 3DS password

The customer has less protection with 3DS.

It seems you haven't really thought this through.

Yep you must be right. We are not going to agree on this, I know from experience though that I would rather have zero fraud and zero impact on sales by having it implemented correctly.

 

[Optegris]

What products do you sell Openmind?

Primarily domain names, hosting etc. Which I should point out attracts a higher than average level of fraud simply down to the nature of the product.

 

[LyndaSandick]

Do you ever wish you had never said anything.................

 

[deniser]

Primarily domain names, hosting etc. Which I should point out attracts a higher than average level of fraud simply down to the nature of the product.

Your customers are more internet astute than your average shopper so I can see they would have no problems with 3D Secure but this does not apply across the board. My customers are generally women often new to computers using their husbands email addresses and have a real problem with 3D secure.

 

[Optegris]

Do you ever wish you had never said anything.................

Nah. No point in biting your own tongue

 

[Optegris]

Your customers are more internet astute than your average shopper so I can see they would have no problems with 3D Secure but this does not apply across the board. My customers are generally women often new to computers using their husbands email addresses and have a real problem with 3D secure.

You would think so but I still process orders for people who then call and ask how to setup basic things like email, FTP etc.

 

[LyndaSandick]

Agree with Sysops.

We have also started reporting them to the police who are actually interested at the moment.

We were advised to ring the local police station to where the goods would be delivered, which we did, and we still couldn't get them to take any action or even show any interest..... which was highly frustrating.

 

[Astaroth]

No, it doesn't. 3DS increases abandoned orders, full stop. You can mitigate the increase, but you can never eliminate it.

Of cause it increases abandoned carts, its supposed to, all the fraudulant transactions are stopped.

I was involved in some consultancy work for a merchant services provider to investigate the impact of 3D Secure a couple of years ago and interviewed a number of their large clients including international supermarket chains, top 5 personal lines insurer and a high street fashion store and certainly a significant percentage of them had reported no increase in abandoned carts once you netted off the reduction in fraud they were experiencing.

Some vendors were experiencing up to a 5 percentage point increase in abandonment on their payment page but having looked at how they'd implimented it, it really was no surprise

 

[FM1000]

Just some advice. We will be selling listings on a directory, what measures can we take to protect ourselves against fraud?

We're not selling a physical product so there won't be any loss to us if fraud is commited, just inconvenience.

 

[bjg123]

3d secure, could, and would, only adversly affect our sales - there is literally no reason to suggest that it would do anything else. We used to ask people to type their name as it appeared on their card - getting rid of this took down the number of abandoned carts, so something as complicated as 3d secure will be worse.

We sell business cards - people don't use fraudulant credit cards to buy stuff with their name and phone number written on it. We have a chargeback percentage which is absolutely miniscule, less than 0.01% adding 3D secure would definitely lose us more customers than it would save on fraudulant card use. To say anyone experiencing a loss of sales through it's implementation is doing it wrong is short-sighted.

 

[Optegris]

Short sighted? I think after being in this industry for ten years and running my own internet based businesses for the last 6 1/2 years makes me anything but short sighted.

It's funny the ones who say that it does affect sales then jump all over the opinions of those that think it doesn't when done right with comments like this. You just carry on as you are if it makes you happy but don't slate someones opinion unless you have facts to back it up; I don't mean from your own site either.

Do you honestly think that if it affected sales as badly as you are making out major retailers wouldn't have implemented it? If so then the short sightedness must be spreading.

 

[Astaroth]

Do you honestly think that if it affected sales as badly as you are making out major retailers wouldn't have implemented it? If so then the short sightedness must be spreading.

It would however go beyond simply "impacting sales" though as you need to look at costs as well.

The large insurer involved in the survey had seen a negative impact from the 3D secure (and had a very bad implimentation of it) but once you also factored in the impact on merchant service's fees and the reduction in chargebacks etc then they were still better off than they were before.

Obviously if they could improve their implimentation and thus reduce the abandonment rate then they'd be quids in but unfortunately the conflict of interests I'd have had stopped me from being able to pitch for that one.

 

[bjg123]

Short sighted? I think after being in this industry for ten years and running my own internet based businesses for the last 6 1/2 years makes me anything but short sighted.

It's funny the ones who say that it does affect sales then jump all over the opinions of those that think it doesn't when done right with comments like this. You just carry on as you are if it makes you happy but don't slate someones opinion unless you have facts to back it up; I don't mean from your own site either.

Do you honestly think that if it affected sales as badly as you are making out major retailers wouldn't have implemented it? If so then the short sightedness must be spreading.

It's short-sighted to suggest any business experiencing a down-turn in sales are doing it wrongly. I know from experience with other security measures on our site that we'll see a reduction in orders (relative) if we implemented 3d secure. Retailers highly suceptible to fraud may implement it because the loss is less than the loss they make through fraudulent credit cards, or because merchant charges will soon be much higher without it. I very much doubt that major retailers do it because they simply want to. In our industry, there is such a tiny amount of fraud that 3D secure would cost us money (if merchant charges were the same). I wasn't suggesting you lacked knowledge in this area, but our company have been proccessing hundreds of orders a day for many years through our website - and have experienced a drop in completion ratios whenever we impliment a new security feature, and this isn't due to fraudulent card users not being able to use the site anymore.

 

[seiretto]

...being in this industry for ten years and running my own internet based businesses for the last 6 1/2 years...

You are just starting to learn then.

I am still learning and I have been in the hosting industry 15 yrs, and have ran Seiretto for 14 yrs. I have found the slightest thing can turn a potential buyer into an annoyed angry user that is then careful to never return again having experienced difficulties. And the 3DS does not help the poor end-user in this at all. Sorry, Phil but after all these years you are still adamant on pushing things which you are currently out to promote, and your blinkered approach highlights this.

Lyndalime is right to post the warning as fraud WILL continue to increase whatever we do and make it more difficult for everyone, not just those poor end-users but all online traders too.

Fraud is and will continue to be BIG BUSINESS online - last year fraud cost £400,000 to each business... STAGGERED? I know I was, and still am - read about it here:
http://www.computerweekly.com/Artic...aud-costs-UK-businesses-163400k-each-says.htm

Watch those orders, if it looks dodgy then it probably is, call them before despatching, and save yourself the hassle and lost time/money.

Just a reminder - bank transfers are now much quicker and COST NOTHING (no lost profits on fees) and are probably the most secure method to receive payments, ensure you offer it as a method of paying - we offer it and it has cut our payment transaction fees dramatically over the years.

Take care

Dave Walker

 

[Optegris]

Nice to see you haven't changed either Dave.

I couldn't actually care less if people implement 3d secure or not on their sites, it's their choice after all, but I'm entitled to an opinion on a public forum. I'm not expecting everyone to agree with it and I'm not jamming it down peoples throats but I certainly won't just sit back meekly and say nothing if I disagree.