Hello,

The amount of information in the public domain regarding credit card usage and charge backs for the hosting industry in particular is pretty limited.

I have 2 questions for anyone who has a few spare minutes to reply.

1) What percentage of new customers (not renewals) who pay by credit card turn out to be fraudulent resulting in a charge back.

2) For anyone answering this that have experienced fraudulent signups, what do they tend to use the account for?


Looking forward to reading some replies on this ...

1) I'd guess it depends on your fraud protection in place. We rarely see chargebacks, maybe once last year? However, we did refund several transactions that we believe were fraudulent.

2) fraudulent signups are generally used for spamming or phishing ime.

1) What percentage of new customers (not renewals) who pay by credit card turn out to be fraudulent resulting in a charge back.

This would greatly greatly vary from one business to the next. Ideally, the goal would be to stop fraudulent signups from even getting through your entire order process. If you're setup properly and screen at risk orders properly they should be a rarity.

Had a big one slip through the cracks last month, verified with ID & CC auth form. Turned out wallet was stolen, which was reported to the police the day of the crime...lalalala.. sticky issue. :o Not much fun at all.

Just have to be careful.

Offhand, I'd say 5% of our signup attempts are bogus and caught by our homegrown fraud-blocker.

Maybe 1 in 500 signups slips past our blocker and gets an instant account.

Usually they upload a PHP bulk mailer and start blasting some phishing scam hosted elsewhere.

We have very little fraudulent signups because of the level of vetting we do.
Human intervention is best IMO. We have a very refine criteria for our client base in order to guarentee quality of service to our customers..

Being a company that doesn't just do hosting, we have around 70% paying by credit/debit card, 20% by direct debit (guarenteed bank transfer) and 10% via paypal/cheque and other alternitives...