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Thread: Fraud Orders

  1. #1
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    Fraud Orders

    Hi,
    This guys keeps submitting fraud orders (over the course of the last 6 months).. he has the card code and the address matches so finding the fraud orders is kind of tough. He uses about 3 different email addresses so usually thats a dead give away. However his IP is forged (as he has a new one every time). How can I track this *******, normally I just void them and ignore them but this guy keeps doing it.

  2. #2
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    http://www.callcustomer.com/

    This confirms the clients phone number before being accepted.

  3. #3
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    Yeah, callcustomer would be my recommendation too
    josh

  4. #4
    Manually check Accounts ?

    I always check the Proxy Database for IP's and if it's a big order (More than $100) I usually ask for a signed form authorizing us to charge the card
    ^_^

  5. #5
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    First off, _never_ accept auto-charging online orders if you're a hosting company. 70% percent of your orders will be fraud.

    You must have online orders forward to your email box (or any database) and manually verify the order by calling the phone number entered by the potential customer. People doing fraud will either enter the real phone number of the card holder, or a fake number; they'd never give their real number because they don't want to get caught. So when you call, and the number doesn't work, it's a fake order. If the number works, then it is the real card holder and they will say either yes, it was them who submitted the order, or no it wasn't.

    Another easy sign of a fraudulent order is bad punctuation. I know this sounds stupid, but believe me, 99% percent of orders with all lowercase letters turn out non-verifiable.

  6. #6
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    I'm trying to understand what is happening here (for my own protection), someone is paying for hosting and the credit card is bad or requesting hosting before paying?
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  7. #7
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    Hi,
    CallCustomer seems good but I really wouldn't like to add another fee and hastle for legit customers that sign up. About manually entering them, that is a possiblilty however I can simply void the orders with a click of a button if they are not legit. I would really like to some how catch this guy, I really only have one guys that submits fraud orders (as my merchant account has strict settings and this guy has all info, address, zip, 3 digit card code etc) I would really like to find a way to catch him, I can post any info relating to the orders but I don't know if that would help.

  8. #8
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    Originally posted by Executive
    I'm trying to understand what is happening here (for my own protection), someone is paying for hosting and the credit card is bad or requesting hosting before paying?
    Explanation: Someone is using a stolen credit card number.
    Matt Walters
    http://mattwalters.net/ - Weblog

  9. #9
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    I use Ikobo, I wonder how they deal with stolen credit cards.
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  10. #10
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    Would be best to find out now rather then later (chargebacks are evil)
    Matt Walters
    http://mattwalters.net/ - Weblog

  11. #11
    You wouldn't have to implement Callcustomer for every order. Just the orders that raise a warning or two with your existing validation procedures...

  12. #12
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    I agree, and in reference to my earlier comment I was meaning it'd be better to find out what your processors policies are on this stuff now, instead of when you get stuck with a fraud order.
    Matt Walters
    http://mattwalters.net/ - Weblog

  13. #13
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    What normally happens when someone uses a stolen credit card? Doesn't the credit card company prosecute? I mean, suppliers who have been paid would not be required to reimburse the credit card compary right?
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  14. #14
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    Originally posted by Executive
    What normally happens when someone uses a stolen credit card? Doesn't the credit card company prosecute? I mean, suppliers who have been paid would not be required to reimburse the credit card compary right?
    The credit card company doesn't prosecute. They aren't in law enforcement. That's the job of the FBI.

    About the reimbursement question: suppliers/merchants _are_ required to reimburse, not the card company, the bank that provides their merchant account whenever a fraudulent order is charged-back.

  15. #15
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    Definitely read over your processors policy Executive. This is all stuff you need to know how it works and how they're going to handle.
    Matt Walters
    http://mattwalters.net/ - Weblog

  16. #16
    Our company has a seperate department in which manually calls suspicious orders and they also review EVERY order that comes in. Chargeback rate has dropped 95% since we added this department.

    Now we are looking into installing a automated system (such as callcustomer). We are in communication with them now. I will keep you updated.

  17. #17
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    I might look into this after getting hit with a $60 chareback this morning.

    Customer signed up for a reseller account, confirmed the order, then the CC was rejected after a month.

    When I asked him about it he just went silent. I cancelled the account, then this morning I got the chargeback notice from Paysystems. Painful.

  18. #18
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    Avoiding Chargebacks

    Another good way to avoid chargebacks, and most people don't look at this, is: get your merchant account through a bank that is tough of chargebacks; one that fights for the merchant instead of the consumer.

    We use Chase Manhattan bank, and we've _never_ got a chargeback! :-) Maybe this is why Chase has the biggest market share in the merchant business for five years strait...

  19. #19
    What I have found strange is that most orders that we get that are fraud are never even used. A sign-up happens, it is usually a yearly payment plan, nothing is ever uploaded, resources aren't used, then we pick it out as fraud, notify the cardholder, void or refund the credit card and that's it....I just don't get it, what's the point?

    Matt

  20. #20
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    Originally posted by mdnetwork
    What I have found strange is that most orders that we get that are fraud are never even used. A sign-up happens, it is usually a yearly payment plan, nothing is ever uploaded, resources aren't used, then we pick it out as fraud, notify the cardholder, void or refund the credit card and that's it....I just don't get it, what's the point?

    Matt
    Matt,

    Yes, I've noticed the _same_ thing! Almost all yearly subscriptions turn out to be fraud.

  21. #21
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    Question

    Originally posted by greg1024
    First off, _never_ accept auto-charging online orders if you're a hosting company. 70% percent of your orders will be fraud.
    I wonder where you have this figure from.
    And if this figure applies to your company you must be doing something wrong.

  22. #22
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    Originally posted by microsol
    I wonder where you have this figure from.
    And if this figure applies to your company you must be doing something wrong.
    Maybe I should clarify: 70% percent of orders will be fraud when you _first_ start your company because script kiddies and hackers will recognize that you're the new guy on the block and figure you won't verify the order.

    If your company gets popular in the beginning, then you'll be getting a lot of referral orders. These referral orders, since they're coming from your existing verified customers, will also be valid. When this happens, you will be getting more legitimate orders than fraud orders. At this point your fraud ratio will be much less than 70% percent.

    Another thing: a series of fraud orders can come from the same person. It's just that person trying a lot of different cards on his illegal list. This can make your fraud ratio higher than 70% percent in the beginning. But those people submitting multiple fraud orders will eventually learn that your company can't be fooled and give up. This event will also cause your fraud ratio to drop significantly.

  23. #23
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    Originally posted by mdnetwork
    What I have found strange is that most orders that we get that are fraud are never even used. A sign-up happens, it is usually a yearly payment plan, nothing is ever uploaded, resources aren't used, then we pick it out as fraud, notify the cardholder, void or refund the credit card and that's it....I just don't get it, what's the point?

    Matt
    No one is going to sign up for hosting using a stolen card and further incriminate themselves by leaving traces all over the place by uploading data etc.

    I expect 99% of the orders are just to verify if the card is valid before the actually "buy" something with it. Most hosts would probably not prosecute if they had a fraudulent order because in reality you have not lost any goods - so they will get away with it most of the time. I assume they test the cards on a web host first and once they know the details are good they go off and spend a good amount of cash for goods elsewhere.

  24. #24
    Originally posted by delirium
    No one is going to sign up for hosting using a stolen card and further incriminate themselves by leaving traces all over the place by uploading data etc.

    I expect 99% of the orders are just to verify if the card is valid before the actually "buy" something with it. Most hosts would probably not prosecute if they had a fraudulent order because in reality you have not lost any goods - so they will get away with it most of the time. I assume they test the cards on a web host first and once they know the details are good they go off and spend a good amount of cash for goods elsewhere.

    I would agree with you if it weren't for one thing...the order is usually annual payment, even when they have monthly options. I have had fraud orders of $700 dollars and the account was never used...not even by fly by night spammers.

    Matt

  25. #25
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    Originally posted by mdnetwork
    I would agree with you if it weren't for one thing...the order is usually annual payment, even when they have monthly options. I have had fraud orders of $700 dollars and the account was never used...not even by fly by night spammers.

    Matt
    I believe this is a test to see if they can place a large amount of money on a card?

    If I could put a $700 charge on the card it would suggest there is a large amount of available funds? if the $700 charge fails then I know that the prostitute I am about to order on this card will bounce lol

    Perhaps? - No one really knows what a fraudster's motives are.

  26. #26
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    Originally posted by mdnetwork
    I would agree with you if it weren't for one thing...the order is usually annual payment, even when they have monthly options. I have had fraud orders of $700 dollars and the account was never used...not even by fly by night spammers.

    Matt
    See what you are doing wrong?

    Before charging an amount that high I would request a signed CC auth form via fax. 99.99999999999999999999% they won't get back to you anyway.

  27. #27
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    Originally posted by microsol
    See what you are doing wrong?

    Before charging an amount that high I would request a signed CC auth form via fax. 99.99999999999999999999% they won't get back to you anyway.
    This is completely true!

  28. #28
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    we almost always call anyone who has an order above $30-40. If something doesn't match up, then we definitely call.
    We use authorize.net w/ modernbill, and eonlinedata and have auto signups.
    We have caught all fraud orders so far (knock on wood) and have had 0 chargebacks. But only 86% of our orders have been REAL orders. The other 14% are FRAUD. And of those 14%, I'd say 90% of those, the person has ALL the real information. Even the Matching CVC Code on the back of credit cards, which to my knowledge is illegal to even store.
    I dont know how they get it or who they get it from. But boy would i love to get my hands on them. there would be so much more time if we didn't have fraud orders.

    The main reason is because most fraudlent orders are for premium accounts (>$100). Most of our orders start with the IP address 203.xxx.xxx.xxx. Most of the 203's have been from Vietnam (a few 203.xxx.xxx.xx i have seen are from Australia). Although, we have several great clients from vietnam using that IP range, most however are fraud.

  29. #29
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    The main reason is because most fraudlent orders are for premium accounts (>$100).
    I think more hosts should think about the psychology behind crooks. You'd be amazed how many crooks will go for the most expensive plan. Simply adding a 'yearly' plan (even though you would not normally) can often weed the crooks out. You don't necessarily have to process the 'yearly' signups in real-time, just let the 'visitor' think you have. If it turns out that the order is legit after you've conducted due dilligence, you then process the order.

    Simply wording your signup forms in various ways can also ward off crooks. Understanding the psychology behind crooks is a very powerful tool.


    The main reason is because most fraudlent orders are for premium accounts (>$100). Most of our orders start with the IP address 203.xxx.xxx.xxx. Most of the 203's have been from Vietnam (a few 203.xxx.xxx.xx i have seen are from Australia). Although, we have several great clients from vietnam using that IP range, most however are fraud.
    It is unfortunate that Australia's IP space gets mixed up with other high risk countries in the region. I know of various high-profile hosts that block Australia along with other countries based on IP space. I would recommend using Geo IP databases instead (such as ip2location.com).

  30. #30
    All my fraud cases are those order for my ultimate plan with yearly payment, so whenever i see such registration come in, i'll be extra caution.

  31. #31
    Paypal is a good merchant who helps the seller prevent chargebacks as long as you follow their Seller Protection Policy

  32. #32
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    Here is another thing some other hosts might want to do,
    I did a search in our database of domains hosted with us for any domain that contains "vn"

    Like I said, we have many clients from Vietnam who are legitimate and great customers.

    But, We have 11 domains that were attempted to be hosted with us containg the letters "vn" somewhere within the domain. All 11 were FRAUD.

    Just a tip for other hosts.

  33. #33
    Since we have started a policy of calling each and every order - no matter the value of the order, or where the user says he is - our chargeback rate has plummeted to insignificant amounts. Get yourself a good LD plan and make use of it.

    Another thing to look at if you aren't going to call each order is do a whois on the domain info they give you - does it match the registration in any way? Domain not registered? Red flag that order.

    This is just personal experience talking but I've found that orders from "women" for fully dedicated servers are >99% fraud - stolen credit cards or hijacked PayPal accounts. The larger the order the less likely it is to be legit

    Keep a db of all fraudulent accounts and compare every aspect of all new orders against that db - got a match on any aspect - red flag the order.

    Be especially cautious of CC info in western names for orders where the email addresses/domains reflect Asian - say Vietnamese, Filipno, or Indonesian - names :-) and of course names all in lower case are an instant giveaway -
    Last edited by abetterway2host; 05-25-2004 at 05:58 PM.
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  34. #34
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    We hand process all new orders and in the past 5 years we have only been hit twice with a charge back.. One we let slide through (our mistake, stupid stupid stupid) the other was a legit customer charge but when they broke our TOS and we canceled and they charged back and the bank did not stand up for us..

    Anyway... We require on all new customers to download a PDF, sign and fax in a form saying they know what they are buying, the name of the company and so on (this is after they pass all other checks for fraud such as IP address and CVV2) anyway.. The fax thing has saved out rears a few times but the http://www.callcustomer.com/ thing sounds easier..

    Are very many people using this?? Does it work? are Banks accepting this as proof of the person saying Yes we bought it??

    I know if the Card is fraudulently used and some how they used a pay-phone or cell phone or whatever to verify the account there is no way to stick the real card holder with the charge but we would like to see a little less faxing and confusion for new customers.

    Thanks for any input on that service.


    Robert
    Light travels faster than sound, which is why some people appear bright until you hear them speak.

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