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  1. #1

    Question Long time customer could be a fraud? What do I do?

    I had a person contact me claiming that his card was being fraudulently used by one of our long-time customers. This customer has been with us for over 3 years, and the person who contacted us says that his card was being charged without his permission for the past six months.

    What should I advice him to do? Contact his card company directly? Will I lose the six months that has already been paid?
    "It does not matter how slowly you go, so long as you do not stop." – Confucius

  2. #2
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    If it's really the card holder you're talking to, you need to do what he says. It's his card.

    There are lots of people that just pay their credit card bills without reading them.

    Maybe he finally read one.

    Still. It's his card.

    [edit]

    Finally read your questions.

    Of course he should contact his credit card company.
    Last edited by SoftWareRevue; 06-02-2004 at 07:18 PM.
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  3. #3
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    Absolutely! Have him contact his credit card company, I'm surprised he hasn't after 6 months. You won't lose any money, the clients credit card company will pay for the fees.

  4. #4
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    That's odd. I would call your customer first and tell him that you've been contacted by someone claiming to be the credit card owner.
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  5. #5
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    But if he's been there 3 years, and says he's only been charged for 6 months....theres something fishy goin on.
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  6. #6
    How do you bill them?

    Maybe he updated the Credit Card Number on the Client control panel for billing. If he clains you will loose 3 Months of profit (90 days or was 120 Days???) As far as I know, since they have a time limit to complain about a charge.

    You should really check that out. Seems fishi.
    ^_^

  7. #7
    Originally posted by Francisco
    How do you bill them?

    Maybe he updated the Credit Card Number on the Client control panel for billing. If he clains you will loose 3 Months of profit (90 days or was 120 Days???) As far as I know, since they have a time limit to complain about a charge.

    You should really check that out. Seems fishi.
    He manually paid by credit card and did use a completely different card number starting six months ago. The person that claims the card fraud says he also contacted many other companies that were charging his card without permission. All his unauthorized charges from other companies point to the same person - my customer.

    I'm glad to know there's a 3 month limit on complaining a charge. Still I'm quite upset that this has happened. Once I receive word from the credit card company, I will completely delete his accounts. I suppose there's no way to avoid a chargeback here.
    "It does not matter how slowly you go, so long as you do not stop." – Confucius

  8. #8
    Yes, you are right. If he did the manual payment with that credit card you will get a chargeback most probably, the best way to resolve this if after you receive the answer from VISA (or whoever it is) if they tell you it is fraud and they will charge back, Just refund them (I think there's a 90 Days or 120 Days limit to do that though. But it is better than paying a $30 or more Chargeback fee)

    Just my Recommendation.

    Good Luck
    ^_^

  9. #9
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    Visa sets up a time limit of 180 a days. If the person who called you does a chargeback - this is not good - as already stated. But the client's credit card company will not pay for the fees.

    I would contact your long-term client. He might have accidentally entered a new credit card number & it was a good one - what are the chances? Did the AVS check out? What about CVV?

  10. #10
    Originally posted by coreybryant
    I would contact your long-term client. He might have accidentally entered a new credit card number & it was a good one - what are the chances? Did the AVS check out? What about CVV?
    I agree. It's possible that the customer mistyped the number.

  11. #11
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    Did you contact the client? ask him/her why he did this?
    i agree with corey could be possible a mistake. Just checkout, look for explanations and then act.
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  12. #12
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    "You won't lose any money, the clients credit card company will pay for the fees."

    I dont understand where you get this from. If he does a chargeback, your losing the money, not the credit card company.

    ???
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  13. #13
    This looks like fraud; I don’t think there’s any chance that your long time user entered someone else’s credit card info accidentally. I would suspend the account and wait for the matter to be resolved. If it was indeed a fraud order and you are charged for it, then that user that did that to you should not get his website or domain back from you. Maybe you should even redirect his domain to your website for some free promotion. If he really has important stuff on his website you could even demand him send a money order (because he might have a tendency to use another card that was not his) for all the money you lost. Once you cash the money order then you can let send him the files and be done with him. I don’t take kindly to scammers and frauds and I see no reason why anyone else should.
    Last edited by BlueCapacity; 06-03-2004 at 01:15 AM.
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  14. #14
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    agreed - I doubt he entered accidentally numerous times at multiple sites

    But yes - explain to the card owner that a chargeback is not necessary, and that you are willing to work with him and his CC company with getting a refund of the monies. And be sure he expresses this to his CC company if you have not already done so.

  15. #15
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    There is always the possibility a mistake was made. There could be a variety of reasons that card was in the system.
    If he has been with you for three years and only the last 6 months are on this card I would immediately contact the customer.

    Find out what they say. If they say it was an accident simply ask for the right card number and, due to circumstances, you need a copy of the front of the CC to verify the number along with a copy of a goverment issued ID.

    I wouldn't recommend asking for the back because that contains the CVV and it is illegal to store that.

    This way you can proceed on one side to refund, and maybe on the other side keep the customer and get paid.

    I realize it is likely that it is a fraudulent card usage, but I prefer to give people the benefit of the doubt during the first 24-48 hours.

  16. #16
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    #1: WHATEVER YOU DO, do NOT just tell the legitimate cardholder to go straight "back to their bank." They will just issue a chargeback and that will negatively impact your merchant account and incur you chargeback fees along with the last 6 months of revenue on that account.

    INSTEAD, tell the cardholder that you will immediately issue a credit return for the last 6 months of charges and go ahead and do that. This will: (a) remove the chargeback exposure on your account for those transactions and (b) avoid incurring a blemish on your record as well as potentially six (6) chargeback fees on top of everything else.

    #2: I'd then suspend the "customer's" account after sending them an e-mail indicating the situation and stating that this appears to be a situation of fraudulent card use. I'd ask them to provide proof that they had the authority to use that card and that you will no longer be providing service to their account as they have incurred a financial loss to your organization and breached their agreement/TOS with you by making false representations and failing to pay the amount(s) due.

    #3: If they provide a valid enough response to you (although I'm not sure what that would be at this point!), make sure that AVS, CVV2, IP all match, get a copy of the front and back of the new credit card AND a copy of a credit card statement... and then call up the bank directly and verify that there is no unusual activity on the card.

    This does sound and smell like fraud. Unfortunately, stuff like this does happen more often than you might think. It is also something that happens in other industries as well - such as merchant processing.
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  17. #17
    Originally posted by cdgcommerce
    INSTEAD, tell the cardholder that you will immediately issue a credit return for the last 6 months of charges and go ahead and do that. This will: (a) remove the chargeback exposure on your account for those transactions and (b) avoid incurring a blemish on your record as well as potentially six (6) chargeback fees on top of everything else.
    I still hesitate to do this because if I credit the card directly, then for sure, I will get absolutely nothing back. It actually turns out that this customer has been using the card for the past 8 MONTHS! If I credit the 8 months back, I lose more than $500.00 (the customer has multiple accounts with us). There has to be some sort of time limitation for someone to dispute charges. 8 months of credits or chargebacks just doesn't seem right. I'm still trying to get word from the customer to explain his side however my feeling is that I will never hear from this customer again.
    "It does not matter how slowly you go, so long as you do not stop." – Confucius

  18. #18
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    If you don't hear from the customer within 24 hours by phone or email you should suspend.

    24 hours is my limit.

    The advantage of crediting back the 6 months now is you can always dispute it later if the credit was wrong. But you save yourself the chargeback headaches.

  19. #19
    If its fraud, and you give him 24 houres to respond he will back up all his files and be done with it. Suspend him before you contact him and he wont have the chance to get his files back, which is what you want if he is fraud.
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  20. #20
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    6 months is the standard - I have seen some issuing banks state as short as two months. If you do not credit him, & the rightful owner calls the credit card company & tells them it was fraud, they willl issue a chargeback - and you will have to pay for the 6 months and the chargeback fee.

  21. #21
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    I believe the chargeback limit is 120 days, although I have heard they can go as far back as 180 days. What I would do is call Visa up and say you are an online merchant and want to do a name and address verification on that card. If you do have the CVV mention if it was a match or not when you submit payment, as you should receive an AVS response each time you bill the card, just don't mention you store it.

  22. #22
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    Originally posted by ChowSumDung
    I still hesitate to do this because if I credit the card directly, then for sure, I will get absolutely nothing back. It actually turns out that this customer has been using the card for the past 8 MONTHS! If I credit the 8 months back, I lose more than $500.00 (the customer has multiple accounts with us). There has to be some sort of time limitation for someone to dispute charges. 8 months of credits or chargebacks just doesn't seem right. I'm still trying to get word from the customer to explain his side however my feeling is that I will never hear from this customer again.
    You say you are very angry and why should you loose $500.00?

    But why should the ligitimate card owner have to cover your loss of $500.00 they are just as much a victim in all of this as you are, the difference is that you took the risk of taking Credit Card payments, the ligitimate owner did not take any risks, apart from owning a credit card.

    If it was me I would refund the card owner, and try to reclaim the money from your customer.

  23. #23
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    Originally posted by jdkhost
    I believe the chargeback limit is 120 days, although I have heard they can go as far back as 180 days.
    I've heard of cases going back as far as two years. It all depends on the situation and the issuing bank. If you do issue a credit, it should protect you from a chargeback. Should.

    Kevin

  24. #24
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    As per Visa guidelines I believe they can only go back 120-180 days. After that if there is any credit issued then I believe the bank covers that. I would check up on it because you shouldn't be held responsible at all. Plus the cardholder should have caught it by now. Two years later? Come on...

  25. #25
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    Do the refund. If you get hit with chargebacks on top of everything else, you will lose another $29 - $35 x 8, as your merchant account company will charge you a processing fee for each chargeback. Nevermind that your merchant account comapny may decide to close your merchant account after receiving so many chargebacks.
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  26. #26
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    Here's a question - what kind of a website does your client have?

    That could give you a better idea of what's going on.

    Boris
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  27. #27
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    just out of curiosity, what is your verification process for your clients initially and when they change cards?
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  28. #28
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    Originally posted by hvoice-boris
    Here's a question - what kind of a website does your client have?

    That could give you a better idea of what's going on.

    Boris
    Can you please enlighten me as to how he could have an idea of fraud through the clients website?
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