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SELLER BEWARE - Credit card fraud prevention left to wizards and magic Last Updated: 02/12/2010 |
 SELLER BEWARECredit card fraud prevention left to wizards and magic Credit card company makes money on fraudulent transactions Disclaimer: I am wrong. I have no idea what I am talking about because I wear a straitjacket to work so all opinions expressed are a figment of my sick imagination. Nevertheless, this is what happened and I believe that thousands of online merchants share my feelings and opinions. We have two online stores MattingExperts.com and GoodVac.com. On GoodVac.com we sell vacuum cleaners and parts. Vacuum cleaners are usually not a target for thieves. It is not very common to see a thief running out of a department store with a vacuum cleaner in his hands. It is not often that fraudsters would hit an online vacuum cleaner store. It all has changed in May of 2009. $1000+ charge-back disrupted the peace at GoodVac.com and the world will never be the same. We wished for the scammer to trip over the stolen vacuum cleaner hose and break a leg and moved on. There is not much we could have done anyway unless we would have spent thousands or maybe tens of thousands of dollars on an investigation, lawyers and jury trial to get the "Stealing Fancy Pants" convicted and thrown behind bars. A second chargeback came a few months later and while we were wondering "what the heck happened" we received our 3rd and 4th charge-backs. The credit card company responses were consistent "you were unable to produce credit card holder's signature for the item". I was confused. Sales seemed pretty solid and passing all online security checks. I just could not believe that 4 claims within a few months was just a coincidence. I dug up the real phone number at one of the delivery addresses. During conversation with the receiver of the package, the true picture started to emerge: I had unearthed a credit card fraud ring that uses online job listings to hire "shipping forwarders". Crooks change card holders billing address to the unsuspecting shipping forwarders" address. Forwarders work hard and keep re-shipping merchandise (bought with stolen credit cards) out of the country or to another forwarder. I am sure that the real credit card holders were screaming to credit card company reps that they "Never ever lived where goods were shipped" yet the information was not passed on to us. So we kept shipping until "charge back tsunami" hit GoodVac.com hard and panic set in. When the water receded I found my bitten nails and ripped out patches of hair all over our office. The wind was whistling funny tunes through my empty pockets. When the going gets tough, one reaches for a phone. I spoke to American Express reps many times. To my question - "shouldn't you be at least partially responsible for the losses because you failed to "smoke out" the crook changing billing address?" they responded that "Anybody can obtain credit card information along with card holders name and personal information so Amex cannot be held liable for it." But then - Eureka! (No pun intended.) An American Express rep tells me that, upon my request they will make a call to credit card holder on the number that has been on Amex file for no less than 6 months and confirm the transaction. So I am itching to put it to the test and sure thing - we are "blessed" with yet another very suspicious sale. I get disappointed very quickly. In order for us to request the "courtesy call" ("courtesy"?! - as if preventing fraud is not a credit card company's job) we have to CHARGE the card first. If it is a fraudulent transaction I have to refund the money but the fees we pay to Amex will not be refunded. My eyes are red, steam shoots out of my nostrils. I am thinking to cancel Amex service. At the same time, I am torn with disbelief that my experience would have been any different with other credit card companies. Before I decided on my next move I receive a letter from Amex. American Express is terminating our agreement because "one or more sizable fraudulent charges made at your establishment" and "it is not profitable for Amex to continue our business relationship." After I calmed down (cold shower and two shots of whiskey) I wrote a letter to American Express Establishment Services apologizing for being attacked by fraudsters and asked them to inform me of the moneys Amex lost during our business relationship. It has been over 3 months since this letter has been signed for by an Amex representative but I have not received any response yet.. So, not only we lost money and fees - we got the blame for being attacked.. Credit card companies always can reach into seller's bank account for "Full Recourse". They still get to keep the transaction fees so they take no losses and make money. Why would they worry and invest in designing any protection for the seller then? While credit card companies compete for customers swiftly processing their claims, sellers have to rely on best judgment, gut feeling, psychic readings and maybe some witchcraft when deciding "ship or not to ship" the merchandise. I wish that someone would start an alternative to existing online payment methods and make an honest attempt to give sellers better tools and protection. I am sure that once the word spreads - all online stores would have this payment method preferred in no time. If buyers are not neglected either - this new instrument would be adopted overnight. Until then, sellers will have to hire witches, practice black magic or simply quit doing business and go and "live in the van down by the river.. " I might see you there shortly.. save me a spot. |