How to Reduce your Chargebacks

[2MuchMark]

How to Reduce your Chargebacks
=========================

I have seen alot of people complaining about chargebacks recently, but seem to be doing very little to prevent it. Please take a few moments and read how method for managing chargebacks.

When a customer makes a purchase on your site, there is all kinds of information available about the purchase such as

- Amount of Purchase
- Username
- Real Name
- Address and Telephone Number
- Email Address
- IP Address
- # of visits to your website
- # Of purchases on your website.

With a little bit of programming, excel finesse, or with the proper stats program, you can view all of this information on your screen at the same time, and highlight similarities between purchases. This can let certain things about the purchases on your website stand out. For example:

Q: How many times has this customer been here before?
If this customer has been to your website only once before and has made a large purchase, this could be an indication of fraud.

Q: Is this is first purchase? Is this a high purchase?
If yes to both of the above, this too could be an indication of fraud.

Q: Are there 2 or more purchases by the same user, but with different real names?
If yes, it could be fraud... in fact its probably fraud.

Q: Are there 2 or more purchases by different users but with the same IP Address? Or Email Address?
If yes, this could be fraud too.

Too many site owners fail to look for patterns in the the purchase habits of their customers. When a customer comes around who appears to be spending alot or spending often, a webmaster may be simply too happy to and push the thought of a possible chargeback out of their mind. This is kind of wrong thinking will cost you money later, and possible cost you the loss of your billing account.

When you see a transaction that looks like it is potentially fraudulent, CALL YOUR CUSTOMER BY PHONE. CCBill and Epoch have the option to prompt the customer to enter his credit card number. (Segpay can also do this for you but I think it is a special request, not sure).

When you call your customer, it is important that you give him benefit of the doubt. You don't want to accuse of anything. Instead, (pretend to) be on his side. "Hello Sir, my name is Mr. Smith, and I manage billing services for Blah Blah. I am calling you to confirm that you made a purchase at 3pm today for $20.00 on your Mastercard. Can you confirm you have done this?"

If he confirms his purchase, you know he is a good and that the purchase is not fraud.

Remember to approach this from a Customer Service point of view. The person you are talking to is the actual credit card holder. If his card has been stolen, he doesn't care about your website or business, he cares about his card. So when you call him and alert him to the problem, you are actually helping him out by reporting the theft to him. Encourage him to call Mastercard and Visa to cancel his card.

If you determine that this customer did not make the purchase, then you know his credit card has been used by an unauthorized user. What you need to do next is to login to your CCBill / Epoch / Segpay account and VOID THE TRANSACTION. When you void the transaction you prevent it from hitting Visa. Yes you lose the sale but more importantly you save the true cost of the chargeback. Your account will remain strong. Most billers like CCBill allow you 24 hours after the transaction to do this. This amazing policy can save your business.

[Penny24Seven]

I must be lucky then, I get 1 for every 400 members. Watch me get one today now

[alf6300]

Originally Posted by Brian837

I must be lucky then, I get 1 for every 400 members. Watch me get one today now

ditto, same here or less.
although it might be (just an hypothesis) that the percentage of attempted frauds increases when your program becomes more visible. Not sure why this would be the case, but possible, we'll see.

[EDepth]

A few additions:
1. Collect decline data as well as approval data, usually someone who is using a stolen CC will get declined a few times before finding a working card. Save every bit of data you can and keep it. Previous history from last year can come in handy.
2. Compare join page IP with the IP of the first user to login under the account.
3. Use a geo-ip database to compare the location of the user's IP vs. their credit card details.
4. Even if the carder is switching IPs / names / cards / etc, you can usually find some similarities between recent declines and a new sale.
5. Create an alert system that looks for certain things, such as certain email addresses, female names, etc.

[2MuchMark]

Originally Posted by EDepth

A few additions:
1. Collect decline data as well as approval data, usually someone who is using a stolen CC will get declined a few times before finding a working card. Save every bit of data you can and keep it. Previous history from last year can come in handy.
2. Compare join page IP with the IP of the first user to login under the account.
3. Use a geo-ip database to compare the location of the user's IP vs. their credit card details.
4. Even if the carder is switching IPs / names / cards / etc, you can usually find some similarities between recent declines and a new sale.
5. Create an alert system that looks for certain things, such as certain email addresses, female names, etc.

[BradBreakfast]

It's the cost of doing business. You are lucky. At least your not a physical retailer who has to ship the merchandise back via UPS to the manufacture for refurbishment just because it's been opened. Your cost of delivery is extremely low, so just focus on creating better and better content and don't obsess over chargebacks here and there.

I would use all that analytical time to worry about leaked logins, which in my opinion are more dangerous. Google Alerts can be helpful in detecting your domain name with the term "password" and "passwords". Be creative. Phantom Frog is another great solution, which allows the user in question to reset their password after being locked out of your site which reduces customer service time.

Chargebacks are probably 50 percent illicit users and 50 percent ignorant users with computer problems or couldn't get your videos to play. My suggestion is to tell users to download VLC media player and Microsoft Security Essentials (anti virus) which are both free. These alone may significantly reduce chargebacks. Further more, I would also have a help desk style help center with knowledge base functionality. Use other peoples YouTube tutorials to help your customers. Think smart and out of the box.

[DWB]

I'm surprised such an intuitive system that would throw an alert or search for patterns has not been made and sold yet. Seems like something most people would want, assuming it was affordable for everyone.

[Sunny Day]

Considering it's porn, the ratios aren't too bad. You have to figure customers can be slimy or trying to get the charges off their card before the wife sees them or the boss on the company card.

About 10 years ago i started a job as the bookkeeper of a small carpet cleaning company. The cleaners would write down the credit card number on the invoice, then at days end bring them to the office. Next day I would write up those old manual tickets, they used from the old credit card machines. Several days later the owner would deposit the tickets at his bank.
I was so busy trying to clean up his accounting mess, that it took me a few days to realize he had a 50%+ chargeback ratio on a legit business. Reasons, 1- cleaners wrote down the wrong number, 2- they didn't notice the card was expired, 3- didn't call in to see if the card was still valid, 4- by the time the owner deposited the charge they customer had gone over limit.
Imagine having a store and 50% of your customer's checks bounced.

5% or less in the porn business. That's great. I realize your companies are going to threaten or actually cut you off. But that percentage seems damn great in mainstream sometimes.

[2MuchMark]

Originally Posted by DWB

I'm surprised such an intuitive system that would throw an alert or search for patterns has not been made and sold yet. Seems like something most people would want, assuming it was affordable for everyone.

Actually we already wrote one years ago and sell it as service option on our LiveCamNetwork sites. You can read more about the service here

http://2much.net/fraud-detection.php

Here is a partial screenshot :



The arrow is highlighting the # of transactions but really what counts is the number of transactions the customer has mad AND the amount of his purchase, AND the # of buys he has made. The blue numbers under the # of logins are "safe" because the customer is a repeat visitor (152 times, 701 times, 152 times, etc). The RED indicators under # of logins are 1, 7, etc. If a customer logs in 1 time and spends $20.00 that is not too bad, but if he spends $99.95 on the first login, that would be an issue. If he spends $99.95 on login 152, it is a very safe purchase.

Our software isn't for sale without LiveCamNetwork, but in all honesty organizing your sales data in this way is not very hard to do. If you don't have good programming skills, grab your sales data and user data and through it all into a spreadsheet. The idea is to visualize your data in such a way so that patterns, or anomalies in your patters stand out and make your business just a little easier to run.

[Major (Tom)]

zap all female users..
ds

[Vapid - BANNED FOR LIFE]

Chargebacks are my reserves problem