Credit Card Fraud

[Guy]

Hi, I could really do with your advice regarding protecting myself against credit card fraud. I have been creating my business over the last two years and invested, like yourselves, a huge amount of time and a fair amount of money. But I am on the verge of closing it down as I have totally had enough of being ripped off by fraudsters!

I now have to pre-authorise every transaction through the merchant account, which helps but I am not enjoying taking the orders anymore as I look at each one and think to myself, well, it looks legitimate...but is this going to cost me £X if I ship the goods??

I thought Paypal would be fairly secure, but I have just received a chargeback for that as well!

How the hell do you guys cope with this? It makes me really angry that we merchants are trying to create a legitimate business and some spotty git is out there trying to rip us off and we are basically alone and vulnerable.

So any tips or advice would be really appreciated as I am at my wits end here.

Cheers.

[Mike Hughes]

Hu Guy,

That's really sad to hear. I think the problem you face is that you sell the kind of things that fraudsters buy because they're expensive and easy to sell on. (iPods, etc).

I sell stuff that's much less attractive to them and get fewer than 1 fraudulent order per 1000 orders and even these ones are easy to spot as they always go for the most expensive things I have, order several at a time, pay for Special Delivery, use a hotmail email address and a mobile phone number.

There are some things you can do though. I don't know what kind of fraud prevention metacharge have but I have seen that HSBC does some things including 'hot address' recognition as well as the standard 'verified by visa' / 'Mastercard secure code' stuff.

There are also some systems out there that score transactions based on various criteria, but they tend to be part of quite large, expensive systems. (Maybe jan would like to consider adding some kind of alert system to her one stop order processing).

At the end of the day all I can suggest is that you make the most of whatever systems there are out there to help you and keep a tight rein on fraud. I suspect that if you get known as an easy touch then the situation is much worse than it would otherwise be.

Mike

[Guy]

Thanks for your reply. Yes I agree, I think word has got around That I let a couple slip through, so I am getting at least 2 fraud attempts a week at the moment! I have involved the police in Cardif (one of the delivery points) and actually they have been extremely helpful, which was a pleasant surprise.

Again, your right about the type of product I sell, I may just get rid of the Ipods etc and keep to the technical networking kit that isn't so easy for them to sell down the local pub! Except these days its ebay!

Metacharge use a "fraud scoring" but it is completly worthless as the ones that went througt had excellent scores! When I use my credit card on the web, I get a popup that requests my password....any idea how I can get that set up. I guess this is specific to the merchant account.

Maybe I need to change merchant accounts?

Thanks again.

[Mike Hughes]

The 'pop up' is the verified by visa stuff. Most decent psp's support this now including protx, secpay, hsbc etc.

Protx seem to be very popular and would probably be my choice these days if I wasn't already with secpay. see: http://www.protx.com/smallbusiness/05.asp

Mike

PS. Do you have a merchant account or is metacharge an 'all in one' solution.

[Guy]

Cheers Mike
Excuse my ignorance, but not sure what you mean by "all in one solution" ?

[pinbrook]

I totally agree with what Mike's says about some shops having products that are more desirable to fraudsters. My very first foray into ecommerce was with an electrical store, they suffered with fraudulent orders from the word go - one scam was a particular driver for a courier firm who was placing orders and when they were loaded onto his van for delivery he just took them home.

Personally I'm not convinced that changing who processes your cards will have much of an effect, but you have nothing to lose from doing this.

[Mike Hughes]

by all-in-one I was referring to companies like paypal, worldpay, etc who enable you to accept credit card payments without having a proper merchant account.

A merchant account is provided by the main banks like HSBC, barclays, lloydstsb, etc and lets you accept credit card payments. On top of this most ecommerce sites use a payment service provider that processes the payment details on your behalf and pay the money into your merchant account.

Mike

[george]

Have a look at this company.... https://www.early-warning.org/ ...which we are a member of. Costs us about a fiver a month. Its got a (growing) database of fraudsters with their info, etc but I find it really handy for their card verifyer thingy that checks what country (most) cards are registered.

Worrying thing is that my missus's Tesco card is on there. (Not as a fruadster may I add)

[Guy]

Thanks for clearing that up Mike.
Metacharge process the credit card transactions and then transfer the payment a month later into my business account.

Maybe I need to look at the products that I sell. I'd rather not. There are loads of sites that cope selling cameras and iPods etc, I think I will try and get in touch with a few of them to find out how they do it!

Is there any insurance that I can take out to cover me on this type of thing?

[Mike Hughes]

Not sure about insuarnce as this would probably cost you more than the fraud. The insurers have to make their money somewhere and as the risk is high the premiums will be high too.

Getting in touch with some other companies is a good idea. They may have similar problems but at least they should be willing to talk about alternative solutions.

Mike

[Mike Hughes]

I've been thinking recently that the post office is missing a trick by not doing a 'verify identity' option on Special Delivery or other signed for services. They could charge an extra £1 or two and get the postman to ask for proof of identity before handing over the parcel. Surely this would prove popular with lots of internet companies and be a good money spinner for them.

The reason this came up as an idea was because I actually shipped to my last attempted fraudster but the parcel got returned because there was no-one there to sign for it (special delivery) and of course they didn't have the ID needed to go and collect it.

Mike

[pinbrook]

is it worth doing an analysis of your fraud cases to establish which items are most heaviliy targetted, then doing a cost analysis to see if you make a loss on selling those products online?

I'd be interested to see which products are targetted, or is it more general that that

[jont]

I had to pull certain products from a site as it was just not worth the risk of listing them - high value, low availability and desirable with an easy resale market. These are now sold through the B&M store and direct to known customers.

This may be a good opportunity to look at the range and try and find something compatible with the exisiting but maybe more (and I hate the word) niche, specialist, off-the-wall etc that maybe the big sites are missing out on at the moment.

[chris ashdown]

You could keep the items online but include something like" due to recent fraud on this item, we only dispatch this item after 5 days to allow security checks to take place"

Not the best solution but most honest people (99.9 % of uk population) may be ok with it, just dont use it on all items

[Guy]

All good feedback, thank you.

I am considering setting it up so that the customer must apply for a login before they can purchase from the site. This way, only known/pre-qualified customers are able to buy. Trouble is, I cannot always be there to refresh the site with their login, so I would expect a days delay on their initial purchase. More I think about it, the more I feel that this may be the way to go...

I presume we can do this with Actinic?

regarding the analasys....well, I have lost more in fraud this year than I made on the entire sales! Probably £3K! So not much analasys required lol. Good job I still work full time I think.