Ok I have been looking into fraud prevention systems such as fraudlabs, precharge, minfraud by maxmind.

All of them give you a score out of 100 or 10 and most based on iplocation billing address and the address the person he is around at the time of ordering. with minfraud you can even use telephone verification.

Questions:

What fraud score do you use? What happens if a person comes to usa for visit and decide to buy something with his/her international credit card.

Also,

Lets say you decided to check orders manually. You call the customer and verify the order ask for the last 4 digit of the credit card used and other order related information. How do you know that is your customer not the fraudster?

They can easily give their phone number or prepaid cell phone number.

So there is no one company that can prevent fraud. Everybody uses ip2location and even asking for Bank name is very useless as many banks are not in the database.

So as a merchant, how do we deal with fraud? If we call them and verify the information, how can we prove that we have all the evidence that user has purchased?

thank you for reading..

We used MaxMind and we have been protected many times over. However with fraud there is always leaks.

We were charge backed on a dedicated server we rented to a user. This user had all the details correct in our database and we had even checked this with PayPal. All details were the same as well as the IP which the user signed up in.

Our biggest mistake was we did not see the user was "un-verified" PayPal user. Next month we received a chargeback from the Credit Card Company saying the card holder did not receive the product. Being PayPal they couldn't do anything and we lost the case.

Hopefully that will change, as we've had ChargeBack's turn around 6 months later. But that's fraud, there's so much you can do but there is always leaks.

We personally use a value on MaxMind between 2.50-4.00

We personally phone verify every phone number attached to every order. We're not going to say if we ask for any personal identifiable information over the phone, because we cannot give away our exact/whole fraud checking procedure.

MaxMind + Phone verification is about the best line of defense you can have towards fraud.

On your merchant account, make sure CCV/AVS is activated.

Chargebacks / Fraud happen every so often. Take them for what they are, and move on.

After you used maxmind + phone verification, you can then use your mind to think if you really need to accept his order :-)

We were charge backed on a dedicated server we rented to a user. This user had all the details correct in our database and we had even checked this with PayPal. All details were the same as well as the IP which the user signed up in.

Our biggest mistake was we did not see the user was "un-verified" PayPal user. Next month we received a chargeback from the Credit Card Company saying the card holder did not receive the product. Being PayPal they couldn't do anything and we lost the case.


I don't understand this. The way your PayPal account should be setup things shouldn't be processing as tangible goods. PayPal should of caught this as well when the chargeback was filed.

I guess by accepting non-verified accounts your chances of any defense were shot to begin with though, I learned very quickly never ever to accept un-verified Paypal accounts.

PayPal needs to get out of allowing non-verified accounts since it's too much trouble for merchants. We've had numerous orders come in and PayPal won't even tell us if the accounts are verified. We had to call in and ask them. Im sure that word-of-mouth verification wouldn't do us anything if a chargeback arouse.

I would like to point out that most fraud prevention systems provide wrong results and don't accept normal credit cards, be careful. Sometimes it is better to perform fraud checking manually.

I have worked with companies that use maxmind. anything over 1.0 gets a call to verify. This has been very successful with them.

MaxMind is good, but in my opinion having a robot call all verify may give the customer an odd feeling. I prefer sticking with humans for that.

Yea, all the companies i help do calls manually.

It would be also nice if all of them to do calls before to cancel accounts :) Some companies cancel customer accounts then verify and unsuspend it. People are usually unhappy with such a service.

Yes, that will help. It is easy to want to jump the gun and cancel accounts that dont look right to fast. I had one the other day that order our billing software, but ordered it twice. I sent them an email about it to ask and did cancel the order. In the email I told them why it was canceled (the order not the account) but they never re-ordered the software and I never heard from them. It could have cost me a sale, I hope not, but I want to do everything I can to avoid chargebacks also.

After you used maxmind + phone verification, you can then use your mind to think if you really need to accept his order :-)
Yes, actually most of companies prefer to act in such a way.

I don't understand this. The way your PayPal account should be setup things shouldn't be processing as tangible goods. PayPal should of caught this as well when the chargeback was filed.

I guess by accepting non-verified accounts your chances of any defense were shot to begin with though, I learned very quickly never ever to accept un-verified Paypal accounts.

PayPal needs to get out of allowing non-verified accounts since it's too much trouble for merchants. We've had numerous orders come in and PayPal won't even tell us if the accounts are verified. We had to call in and ask them. Im sure that word-of-mouth verification wouldn't do us anything if a chargeback arouse.

We're not processing things as tangible goods.

What I just wanted to point out is my recommendations is to never sell to non-verified account on payments of $50. That way your a little safer in terms of chargebacks.

The non-verified accounts is just a big problem that PayPal should look into.

Anything over $50, and they are paying via credit card...you should ask for a scanned copy of their CC and Photo ID.

I think last month was our worse month ever in fraud and we had to implement some very tough procedures and security settings. We have maxmind at a level to mark anything as fraud pass 2.5. And we have maxmind give a phone call to every order that is made through our system. Having to spend 100's a month on phone calls is a very big downside, but still is cheaper than $1,000's in charge backs. Had a few chargebacks that resulted in months of reoccurring services to be refunded...very nasty chargebacks!

Anything over $50, and they are paying via credit card...you should ask for a scanned copy of their CC and Photo ID.

I think last month was our worse month ever in fraud and we had to implement some very tough procedures and security settings. We have maxmind at a level to mark anything as fraud pass 2.5. And we have maxmind give a phone call to every order that is made through our system. Having to spend 100's a month on phone calls is a very big downside, but still is cheaper than $1,000's in charge backs. Had a few chargebacks that resulted in months of reoccurring services to be refunded...very nasty chargebacks!Their phone verification is as expensive as $0.5X/call to some countries. Indeed quite a huge downside...