Web Hosting Talk : Web Hosting Main Forums : Running a Web Hosting Business : What do you do when a Chargeback comes through?

[PCS-Chris]

Lately it seems that Chargebacks are becoming a more regular occurance at an alarming rate.

We have had a number of chargebacks again recently, all VPS. Now with VPS or Dedicated orders these are automatically screened by Maxmind, and are also checked by our Billing staff before we go ahead and activate the account.

Despite this, we have had 10 Disputes (well, 10 payments from the same person counted as 10 disputes) reimbursed from our paypal account. EVERY SINGLE ONE of these payments also had a £7 "fee" attached to it.

It's one thing to bail out a Credit Card Holder because some conartist has used their information, but Adding a £7 fee to every paypal payment is nothing but bang out of order.

Now, please dont flame about this, blablabla you agree to their Agreement. Which is true, because without PayPal as a gateway we would lose a lot of business.

However when you are faced with a chargeback (the oh so common stolen cc), how do you act upon that?

I mean after all, if you can't provide "tracking information" there's nothing you can do about it.

Correct me if I am wrong but as a customer, If I bought a service and disputed that, they wouldnt touch it as it's intangible.

If I disputed this as Unauthorised in PayPal, or with my credit card company/bank, it goes through, no questions asked.

Needless to say were making some losses this month, after almost an entire year's worth of revenue from a VPS customer has kindly been removed from our account.

[Lemon Sky Media]

In order to prevent some less scrupulous people from abusing our services, we send out a postal invoice and overview of their services, in order to obtain tracking information.

If a person has had their credit card or account used by someone without their knowledge, we will happily refund them. If someone is trying to pull a fast one however (it has happened), we pull out the tracking information from the postal mail.

At the end of the day, there's not much you can do about someone using a stolen credit card. You could attempt to contact an executive at Paypal to have these fees removed, but I doubt it would be done.

[PCS-Chris]

Indeed, it's not our first chargeback by any means. It's just one of those ongoing annoyances of trading online.

I've been on the phone for hours on end with PayPal before, bouncing between people who I just cant make sense of at all, to those who are plain useless. "This is in section x. of our Terms". To be honest I'm the kind of guy that likes things straight forward and honest. So if thats really the case paypal would do a better job of saying straight away "Theres f*** all you can do".

[EdwardTobia]

I totally see where you are coming from.

PayPal need to introduce new methods to reduce the risk of false unauthorized transfer / item not received claims ...

Lemon Sky Media's theory is pretty good, about mailing them the overview of their services, as that gives you the ability to provide tracking details, i never thought of this myself but its something im going to take into account for my business...

Regards,

[Lemon Sky Media]

Originally Posted by EdwardTobia

I totally see where you are coming from.

PayPal need to introduce new methods to reduce the risk of false unauthorized transfer / item not received claims ...

Lemon Sky Media's theory is pretty good, about mailing them the overview of their services, as that gives you the ability to provide tracking details, i never thought of this myself but its something im going to take into account for my business...

Regards,

Even if it's still classed as a service, I've found Paypal will take a more in-depth look at the case if there is tracking information.

[j2m2]

I would limit my customers to US based only or people who don't fill out fake information. Some times maxmind misses the simple fact that the address and the zip code does not match the given phone number. A simple area code look up while screening orders should weed out a lot of people. Also implement a email fax where they send you their ID (most hackers are too lazy as $5 hosting is not worth it for them)

[hD-Scott]

Start by going through extensive auto and manual fraud checks prior to accepting order. That has drastically reduced chargebacks for us.

[Lemon Sky Media]

Originally Posted by powerMonster-Scott

Start by going through extensive auto and manual fraud checks prior to accepting order. That has drastically reduced chargebacks for us.

That is definitely something that people should take note of. Step up your fraud procedures to the limit, and then step them up some more. This can only help in the long run.

[RDOSTI]

Time to add extra layers of security. Mentioned above by a WHT colleague - postal verification or driving license verification.

Also open a WHT thread and start listing our the chargeback customers. In the premium section we started that and helped a few companies reject some potential repeaters.

When you share data about chargeback customers (make sure your terms mention that you are allowed to do that) , you can make sure that those abusers dont get far ahead and they might even come back to you with an apology or excuse of an apology and pay you again

[iRageinternetltd]

Chargebacks are part of the online business, the only thing I hate, is when a customer orders somethng and then change their mind ask for a refund on domain and hosting, you refund hosting, not domain and they do a chargeback, that's annoying as hell.

[Courtix]

Its a shame somebody cant make a site, where hosting companies (verified) can log in and check known scammers, fraud usernames, emails, ref numbers etc..

[PCS-Chris]

Originally Posted by Courtix

Its a shame somebody cant make a site, where hosting companies (verified) can log in and check known scammers, fraud usernames, emails, ref numbers etc..

That's actually a really good idea. Although I'm not sure about the legal side of things, i.e. storing/displaying their details publicly there. Even if they are scammers.

[Courtix]

Ya im sat here now thinking to myself, wow why did I post it and not go make it.. hehe

Some legal investigations would be needed for data protection, but we would be talking known emails etc to avoid not personal info on the ppl involved.

[plumsauce]

you refund hosting, not domain and they do a chargeback, that's annoying as hell.

But, do you then not own the domain?

Evil minds can think up lots of things when they control a domain that someone else is depending on.

[mfwl]

We have been hit recently. I had over £2400 go through our paypal account in 2 days. It was a nightmare. The transactions were all held by paypal and eventually returned to the account holder. I am unsure as to whether we have been charged I will have a look! I hope not!

The problem with us was that we were using WHMCS on automatic account creation. We changed this to manual but WHMCS got hacked and they were authorising the transactions themselves. We fixed this by htaccess passwording the admin folder and touch wood its all stopped!

Not impressed though!!

Matt