how to stop credit card chargeback fraud scams
Post on 15-Apr-2017
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How to Stop Credit Card Chargeback Fraud Scams
UGH....a Fraudulent Chargeback
Credit Card Chargeback fraud can happen for numerous reasons, and most likely you are readingthis article because you own a business and have been hit with the awful chargeback and you'reprobably pretty upset and possibly even nail-biting if the amount is large.
Let's first discuss a few different kinds of credit card fraud -
HOW TO PROTECT YOUR ASSETS IN ADVANCE
If you're reading this article now, its probably because you have already been hit with the creditcard chargeback scam, but there's no reason you can't take preventative measures to try and stopfuture fraudulent chargebacks. Here's a few things I have been doing for the past two years to try tocut back on Chargeback Fraud BEFORE it happens -
MERCHANTS - be VERY SKEPTICAL of items being shipped to FL with any address with "NW" in it.Simply copy and paste the whole SHIP TO address into google and put Quotation marks " " on eachside of the address (see photo below):
98% of these addresses are FREIGHT companies. These companies forward your merchandiseoverseas, they are NOT "real" addresses, per say. Whenever I come across one of these addresses, Icontact the customer VIA EMAIL and tell them that my bank is NOT ALLOWING me to process theircard due to something not matching. I then ask them to call me. They NEVER DO. Any REALcustomer would gladly contact the business to resolve any issues.
2. Any order I find suspicious, I will google the customers name and state. If I can't find a Facebookpage or ANYTHING that matches the person, it is most likely they are planning fraud. Suspiciousorders, in my industry, consist of abnormally large orders, orders that contain a multitude ofdifferent sizes, orders that contain the most expensive items I sell. Go ahead and try it using yourown name and state, for example "Bob Newman" KY (or whatever your name is. Use quotationsaround your name but not around the state.
3. Very tiny orders are also skeptical. Many credit card thieves want to "test the water" with thestolen card info so they will purchase the smallest priced item possible - something for $2 (or less). Ifthe item arrives and the credit card is still active, the thief can then go in for a bigger and bigger hit.One solution to this is to simply not carry items that are this low priced. Honestly, unless you'reselling tons of them, you're not making money anyways (unless your shipping is profitable enough tocover all your costs, including time when you sell an item for $0.99)
4. Different BILL-TO and SHIP-TO names or the same name, but an address that is in a differentstate or across the nation. While its possible someone could be buying a gift for someone else andhaving it shipped directly to the giftee, I have ran into problems here as well. If the BILL-TO andSHIP-TO name matches and the state matches, it is likely that someone is simply having an itemshipped to their work. If you're nervous, don't hesitate to use Mapquest. A 6-hour drive to workshould be a "red flag".
5. Suspicious orders through which the customer has opted to "checkout" as "guest". Of course,simply checking out as "Guest" is not a reason for alarm, but if the order is sketchy on top of therefusal to give contact information; raise that red flag!!!! Would you EVER "invest" in a veryexpensive order and NOT give information for the company to reach you? I know I wouldn't.
6. "Rapid-fire orders" - It is important that you, or someone, tries to keep up on customer names.This can be daunting if you are loaded up with orders, but I swear to you, having someone "screenorders" instead of just putting them right through to "shipping" / warehouse will save you a lot ofdamages. Some eCommerce sites show you how many times a customer has ordered and dates,others do not. If you notice 3 orders in 3 days, all being shipped to the same address, be verycareful. Would YOU order through a site 3 times in a row before package #1 even showed up?
HOW TO CATCH A CHARGEBACK SCAMMER
While you will never be able to catch 100% of scammers, you can use all of the techniques discussedearlier. IF you come across an order you believe to be suspicious, you have several options:
1. Call your credit card processing company and request verification of the card used for thetransaction. This can be timely because they will likely give you a second phone number to call. Butif 20 minutes of your time is worth saving your assets and avoiding a chargeback (too manychargebacks will result in the loss of your merchant account), then you need to evaluate how much20 minutes of your time is really worth.
2. OR, an alternative I often employ is simply emailing the customer and telling them to contact meto verify credit card information because it appears there may be a typo or an issue that ispreventing my bank from processing their card (OK, its a white-lie, but NONE of them have EVERcalled my bluff and actually contacted me.) You can typically get a pretty good feeling for someonewhen you talk to them on the phone if you're street-savvy, which, I assume every good businessowner is. If someone does call you and you're STILL skeptical, look up their phone number.
3. OR, if the order is big (like thousands of dollars), demand a fax be sent. This is very common andanyone who is buying in large bulk should have no problem sending a fax.
4. You can also insist on only accepting Western Union payments from International Buyers from"red flagged" countries - and by accepting a Western Union, the buyer must go into a Western Unionin their area and send it, electronically to you - NEVER accept a mailed Western Union, Money Gramor Check.
5. An alternative to Western Union is to have a bank account that you use ONLY to accept wiretransfers. As soon as the funds are received, transfer them online to your business account, butNEVER give out your business account information. For example, you can have a personal account
that you keep a $25 minimum balance in that you use only for transfers, but this account can beconnected to a different account online. Be sure to sign up for FRAUD PROTECTION TEXTMESSAGING. Even if you only maintain a $25 balance, if the buyer attempts to use your accountinfo to purchase a single thing, you will get a text message immediately and you're protected.
READ MY NEXT ARTICLE "HOW TO WIN AGAINST FRAUDULENT CHARGEBACKS