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Got $300 chargebacks due to stolen cards-Seeing red

Discussion in 'Business & Tax Advice' started by mkbowers99, Sep 7, 2012.

  1. mkbowers99

    mkbowers99 Regular Member

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    Hey guys,
    I have been working on my online biz for the last 6 months and finally getting some cash rolling in. The biz provides services to clients and no product is shipped. In the beginning I used PayPal but 3 months ago they started holding my money so I switched to Authorize.net. Things were going good and I cleared away $700 in profit last month. Lo and behold, today I got three 'chargeback advice' from Authorize.net saying that the credit cards used were fraudulent and that they had taken $300 from my account. I banned the user from my site but the damage is done! They are asking for shipping information and AVS, but I never shipped a product so I guess I am screwed. I never had such issues with PayPal and am wondering if I should swallow my pride and go back to PayPal. Have you experienced something similar and how did you combat it?
     
  2. swagthegame

    swagthegame Regular Member

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    Virtual goods are almost impossible to show proof you actually gave the client goods...
    You should make sure all security checks pass before charging there credit cards... Ask Authorize for Verfied by visa and mastercard...
     
  3. bryanon

    bryanon Executive VIP Premium Member

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    There's not a whole lot you can do about fraudulent purchases, apart from having some obvious fraud checks in place.
    Check out what authorize.net themselves offer/suggest: http://www.authorize.net/resources/fraudprevention/

    And whatever you do, don't even consider switching back to PayPal. This would be the worst decision you can make. Chargebacks happen everywhere, including PayPal, and you'll still have to pay for them no matter which payment processor you're with. But when using PayPal you also have disputes to worry about, and obviously the fact that your funds are never safe.
     
  4. twistedtrick

    twistedtrick Power Member

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    On top of all that, if you get hit with a rolling reserve you can count on XX% of your money being untouchable for 90 days...always a fun time!
     
  5. Techxan

    Techxan Elite Member

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    No matter what you do for someone, burn it to a disk, even if it is a list of back-links or a written explanation of the services delivered and have it delivered with a postal return receipt requested.

    Instruct the user to let you know if there are any discrepancies. (Set up a help desk and instruct them to submit a ticket if they have any issues.)

    If you have problems, you can say that they did not notify you of any problems after delivery, show your proof of delivery, and the fact that they did not use the help desk system which you have set up to resolve customers concerns.

    Problem solved.
     
    Last edited: Sep 7, 2012
  6. Wizardly

    Wizardly Newbie

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    Switching merchant accounts won't help. You just need to do your best to spot out fraudulent transactions. Back when I had my online store, I used PayPal Virtual Terminal as my merchant and would get about 5 fraudulent orders a month. After the second charge back, I started to see a consistent pattern in these orders and could spot them out pretty easily. Otherwise, I'm sure there's all kinds of programs out there that can help you sniff out the bad ones.
     
  7. bryanon

    bryanon Executive VIP Premium Member

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    Not necessarily. This will only help you in case of "item not received" chargebacks, but in my experience these account for a very small percentage of chargebacks, with the most common one being "transaction unauthorised", the only help against which is a customerĀ“s physical signature on receipt or a colour copy of their credit card and identification document.
     
  8. Techxan

    Techxan Elite Member

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    Your point is well taken.

    In the US anyway, the receipt is signed by the customer when the package is delivered.

    Perhaps "problem solved" was a bit much but it goes a long way when this is the issue. At least you did deliver a product and can prove it. At least you have one leg to stand on to try and get your money back.
     
  9. bryanon

    bryanon Executive VIP Premium Member

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    Oh yeh absolutely. Wasn't at all trying to say that sending a physical package is pointless. In fact, we're doing the same thing ourselves and this has helped us numerous times (not necessarily with chargebacks but certainly with PayPal disputes). I was just saying that this isn't a complete solution for the whole issue.
     
  10. dariobl

    dariobl BANNED BANNED

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    According to laws, there is no any kind of insurance on virtual good, nor you can sue someone for charging back the cash used to pay for virtual goods. So yeah it is a risky business.