:confused:

Uhhh, okay, I'm not exactly sure how chargebacks work out, so can someone explain them to me?


If I sell someone a $20/year hosting package, and 6 months later they decide their done, they can just charge back the amount? - That's kind of crap...


Or, they could sign up for a monthly plan, spam the world in a week, then chargeback the amount? And there is nothing I can do?


What about a problem customer.. If I have to remove someone because of something, they can chargeback what they've paid?

I don't understand how thats humanly possible or legal...

Yes. To all three. :D

Unfortunately, there are a lot of scum bags out there. While you can never prevent them without the signed sales draft, you can limit them. Do a search here about them. Tons of stuff.

Lirath,
Unfortunately selling a service over the internet leaves all of us quite exposed. If you do not have a imprint of the card and a physical signature it is very easy for a chargeback to occur and many merchant banks will take the word of the card holder over the merchant unless you can produce the documents proving the person was present.

I recently got charged back for 2 fraudulent international cards totaling about $600 and my merchant bank would not accept any explanation from me, they immediately changed my account back and canceled my merchant account because I went over the 1% (dollar amount) chargeback number.

By terminating my account they placed us in the TMF file which means it is next to impossible to obtain another merchant account. I so not quite understand how one merchant bank can have so much power over a business let alone not want to help defend the charge-backs.

I guess they are finding it cheaper to just pass the cost on the the merchant. My advice is be very careful about who and what you accept and if I were you I would not take a card unless it passes the full AVS check at a minimum. It sucks loosing merchant account privileges.

If someone even hints at a chargeback take them very seriously.

This is so true, in regards to chargebacks. One would think a merchant bank would want to work with its customer as thats where they are making there money from.

Some of the ways to prevent fraud is doing address verification

As well as the new 3 digit code on back of each card.. AVS I beleive its called

But they can still scam that now as well....But the best thing to do is hold payments for 5 days and either fax or mail them the information I know its timely and possibly cost defective however in the long run it will be cost effective ;) Have them fax that back with a photo ID.

Another thing I done was match address with name and went to my MCI account and looked up their phone number and verified the address with the phone number as well as called the client and asked if they made this purchase, if they said yes then I would ask for their date of birth and last 4 digits of their ss#

Just some ideas

Tom

Yes I had one of these people who signed up for my affiliate program - and 3 months later charged back - so that's monthly fee +25 dollars chargeback * 3.

As far as I can tell - the hosting company always gets screwed in all cases and the scumbags always win when it comes to chargebacks. It doesn't matter if you delivered the goods as promised or not - and in this case I did but it didn't matter one bit. The only good thing is they are put in the "never sell anything to this person again" list at some credit card places.

JDT

Definitely a problem with the credit card industry. I hope it turns around someday... I mean there has to be some sort of fairness in this regard. If the service actually was not provided or terrible, then yes, the customer should get the chargeback, but if they are doing it just to get something for free, then the credit card company should not allow this.

Obviously one thing has to be understood..There will be never a technology or a solution where one can prevent fraud. As for the AVS also known as Address Verification System..DO NOT RELY ON THAT..because think about it..here is a scenerio..

Credit card thief has all the information..spoofs an ip that is from the same location as the credit card address..signs up with you..you verify everything is good..2 months later you find out it was fraud...hmm?

Also many a times companies that sell products don't understand that AVS is worthless! why..here is the reason..AVS checks the zipcode and the STREET NUMBER only!! not the address so for example if an address of a credit card holder is 2461 MyStreet Blvd, Los Angeles, CA 91303 ...That product can be delivered to 2461 Fake Street, Los Angeles, 91303...So watch out for that..

My advice for small clients just verify at the most..as for big clients meaning $40/month or higher it costs you $10 at the most to do a next day letter to send to the client and ask them to confirm the purchase and sign it...We handle clients only this way. Never had a problem with chargeback because we know how to fight...Theses are some nice tips..

;)

One other thing to keep in mind is the authentication process never compares the card holder name to the card number. This is one of the simplest fraud checks that could be performed and one would assume this is done in the authentication process but it is not done at all.

Basically all someone needs is a good card number and an experation date and they can go charge a bunch of fraud transactions and burn some merchants.

I feel for all the people here that have been screwed out of mucho bucks from customers.

Full AVS verification isn't enough, so don't let that fool you.

I compare chargebacks to testifying against a cop......and it's sad it has to be that way. :rolleyes:

I don't know of ANY online business that mails out a confirmation receipt via mail and gets the customer to sign it. I'm to the point now where Mastercard/Visa/Amex/Discover/Banks/etc. need to convince me (an online merchant) why to accept credit cards as a method of payment. :rolleyes:

Originally posted by WebmastTroy
I feel for all the people here that have been screwed out of mucho bucks from customers.

We just had a win. A client (well, their client) inadvertently charged back a payment when they didn't recognise the charge on their statement. Our client spoke to his client and explained who paysystems.com was, and to cut a long story short the card holder gladly repaid the original account and reimbursed us for the chargeback fee by direct deposit.

Cheers

Gary

The customers who do turn out to be fraud are probably going to turn out to be chargebacks (from the actual card holder when they see there is a charge(s) to their credit card(s).) Although there are lots of people who go with a service for three months, then charge back the whole amount. The service provider does not get paid for those three months ... how can we prevent that from happening?

Originally posted by Benjamin
how can we prevent that from happening?

Just as soon as folks are willing to give up their privacy, globally recognised digital signature technology might come in to play. :)

Gary

I had a $400 transaction go through which was obviously fraud so I refunded it. How ever the card holder has charged it back anyway so they have basically stolen $400 from me. Worldpay are disputing it for me.. hopefully they will win.

How can they chargeback somethings thats been refunded? Unless you refunded it wrong, theres no way.

If you get enough information when you signup, and it wasnt someone fraudulently using someone else's credit card, you can always send the amount owed after a chargeback to a debt collection angecy. Put it on their credit report if they dont pay!

I would have PMed alaneads this question, but I'm sure many other people would have more input also. Where are some good collection agencies? I'll be sure to do a search on the forums, but if anyone knows of any good ones (that know the specifics for web hosts and ISPs), let me know.

I dont know any, I havent started my web-hosting business yet.. but if I recieve enough chargebacks to make it worthwhile, I will definately use a collection agency. The best are ones that only charge you a % of what they collect. If anyone knows, please post them.

I had a $400 transaction go through which was obviously fraud so I refunded it. How ever the card holder has charged it back anyway so they have basically stolen $400 from me. Worldpay are disputing it for me.. hopefully they will win.

Actually this sounds far more like worldpay messed up. If you refunded quickly then either the card holder wouldn't have even known about it because worldpay wouldn't actually have charged the card but merely obtained a preauthorisation that they let expire, or the funds were taken and restored, and the card holder should have seen that.

Preauth gives the merchant (who is worldpay in this case) a time period within which to charge the card once goods are shipped. Companies like 2checkout and others use preath to earmark the funds, and charge the cards some time later. Technically the charge should happen once goods have been shipped. The preauth expires after a time period and the cardholders funds are available again. AFAIK an expired preauth won't show on the card hodlers statement because the funds were never taken and charged to the account holder, but merely earmarked for you if the transaction did go through during the preauth period. However I don't know whether WP do use the preauth merchant mechanism or not.

Perhaps the refund wasn't made quickly, the charge was made without preaith and the refund happened just after the cardholders statement was issued. In which case they'd see the charge but not the refund, but I suspect a screwup elsewhere.

I dont think worldpay use that method unless you request it to be set up. I refunded it within a couple of days. Im pretty sure the disput will be sucesfull *I hope*

Can people do a chargeback via paypal and their credit card there?

Originally posted by Lirath
Can people do a chargeback via paypal and their credit card there?

Yes, they can, although the charge back goes against Paypal. Paypal will turn around and collect the funds from you however.

Aaron

Paypal has screwed may people over this way, check paypalsucks.com for interesting info.

Actually, Paypal is slanted toward the hosts if you go through the normal Paypal dispute system. If someone calls Paypal and tells them they didn't get the service, PayPal just tells them, "too bad". It has to be a tangible, shipable item for PayPal to get involved.

but if they do a chargeback from their credit card with paypal, they lock your account.

Originally posted by SplashHost.com
I had a $400 transaction go through which was obviously fraud so I refunded it. How ever the card holder has charged it back anyway so they have basically stolen $400 from me. Worldpay are disputing it for me.. hopefully they will win.

Hey Alan,

I have the same problem, back in July it started and it's still in dispute :confused: