Guys

We got into following situation: several affiliates who registered in our system and started selling our products online, made fraud sales. Now we are facing few hundred highly suspicious fraud orders.

What advices are? Refund them all? These custs dont reply to emails and phone numbers arent valid.
Is there any other choice except refunding?

We do not want to get all them as chargebacks; but increading our refund rates twice is also undesirable..

Needless to say that we frozen and kicked off those affiliates.

Thanks in advance

Refund all of them as its cheaper and chargebacks will kill things even more. Also speak to your merchant and let them know to avoid any other problems

always refund a fraudulent or suspect order - its far cheaper than paying the chargebacks etc when the real card holder queries the transactions

Agreed 100% - contact your merchant services provider, explain the situation to them and the reason for the refunds and refund the payments to avoid incurring any further chargeback liabilities.

While it is not a happy thing to incur the costs of those refunds, it is still a better situation than incurring 100's of chargebacks which can lead to far more serious and devastating issues with your merchant processor.

You will simply gain problems if you hold the funds. Refund them as soon as possible and move on.

You will simply gain problems if you hold the funds. Refund them as soon as possible and move on.

Exactly. It sucks seeing the money go, but it's fraudulent and part of the business...

If you collect them and put them in pre-auth mode, you can simply ignore them and capture the genuine orders. Leaving it in pre-auth mode for few days will get them cancelled automatically. i.e it will unblock the real cardholders limit after few days.

thanks for advices.
i'm contacting our merchant provider.

pity we got such affiliates untracked.

I have just posted about elsewhere about check fraud - http://www.webhostingtalk.com/showpost.php?p=3617545&postcount=23

But this thread looks to me as if it could possibly be a similar scam, possibly using credit cards. I don't have enough detail to be certain, but I'll post this anyway though, so that people are aware of the threat.

There are a lot of overpayment scams doing the rounds at present. For example, overseas students signing up for courses, then finding they "cannot get a visa", and asking for a refund - the refund is made before the university discovers that the original payment was fraudulent.

If you *think* you have been paid and are now being asked to make lots of refunds, consider how certain it is that you really have been paid. There are technical weaknesses in the banking system and just because money appears in your bank account does not mean that the bank won't change its mind weeks later (up to 6 weeks later!) and tell you that the payment(s) you received were fraudulent. The result - you will lose any money you paid out.

In general, the only good defence is to be sure who you are dealing with. In your specific case, I would urgently check out the intermediaries and I would talk to the banks & credit card companies as well

HTH

Emma,

As the refund is performed via the exact same route the 'money arrived' - I don't think it's an issue in this case: Unlike say a university that may mail out a money order instead or something silly.

I could be wrong though but these are all being refunded to the same card they were bought with.

Yes, I think you're right David.

Perhaps a more likely way a webhost could be scammed is if commission has been paid to affiliates before it becomes clear that the credit cards were stolen.

Again, the only certain defence is to know who you are dealing with. If that is impractical for any reason, consider limiting the amount of business you do with them for an initial period, and check out the cards that they use in the first few transactions