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How do you combat "Friendly Fraud"?

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eqttrdr

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Just wondering if anyone can shed some light on this topic..

For those with intangible digital products, ebooks, info, memberships, courses...etc...

What if anything can you recommend to combat those people who are just plain evil, unscrupulous individuals who purchase something online with the full intent on consuming, downloading, using and keeping the digital product but also 100% set on putting in a dispute with paypal or cc merchant to get their money back?

Seems as time passes even though we deliver massive value we are getting more and more women who download our product but then put in a dispute as soon as they download the info/course/ebook.

Chargeback fraud - Wikipedia

Ideas?


Thanks!!
 

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Roli

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Just wondering if anyone can shed some light on this topic..

For those with intangible digital products, ebooks, info, memberships, courses...etc...

What if anything can you recommend to combat those people who are just plain evil, unscrupulous individuals who purchase something online with the full intent on consuming, downloading, using and keeping the digital product but also 100% set on putting in a dispute with paypal or cc merchant to get their money back?

Seems as time passes even though we deliver massive value we are getting more and more women who download our product but then put in a dispute as soon as they download the info/course/ebook.

Chargeback fraud - Wikipedia

Ideas?


Thanks!!

Bloody hell! What's so friendly about that?? It seems it affects physical products as well. I'm sorry I can't offer any solution; I hope you get some good answers to this. This could spread like a virus :-(
 

SquatchMan

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Not much you can do besides target to higher quality customers.

However, whoever invents a solution to the chargeback on ecommerce will make some serious money.

Maybe once technology advances far enough we can pull the information from their brain if they do a chargeback.
 
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Ecom man

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Literally all you can do is reply to each and every chargeback you receive. Send all the pertinent info and hope that the credit card company sides in your favor. It sucks! The online chargeback system needs to be redone as I lose far more money to people with friendly fraud than I do actual scammers.

The main issue is credit card companies care more about their customers than they do about the truth or whether they take money from merchants. The only way the issue would ever get fixed is if huge merchants (Amazon, Walmart, etc.) can get the CC companies to apply a better system. IMO filing a chargeback should be a two step process

1. You contact the credit card company who then calls the merchant and sets up a time to do a three way call while the merchant gives pertinent information (item that was ordered, date and time of the order, shipping addresses, ip address the order was made from, email address on the order etc.) Having this simple step would eliminate the honest mistake of people not remembering the company name when it shows up on their statement.

2. If customer still says the charge is not them then it goes to 3rd party mediation. Mediation is paid for by the loser of the case. The merchant would want to be sure that his info was accurate and that looking at the info he believes that the charge wasn't fraudulent before he paid for the mediator. The customer would most likely either drop the case if friendly fraud or if real fraud would go through with mediation. They have mediation now but it requires far more info than any online seller would have (requires signature confirmation on the order which is not cost effective to ship all items with just to stop the friendly fraud unless the item is worth hundreds.) Currenty the mediation cost is also astronomically high so it isn't worth it to take a chargeback to mediation as a merchant.
 

BradD

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Literally all you can do is reply to each and every chargeback you receive. Send all the pertinent info and hope that the credit card company sides in your favor. It sucks! The online chargeback system needs to be redone as I lose far more money to people with friendly fraud than I do actual scammers.

The main issue is credit card companies care more about their customers than they do about the truth or whether they take money from merchants. The only way the issue would ever get fixed is if huge merchants (Amazon, Walmart, etc.) can get the CC companies to apply a better system. IMO filing a chargeback should be a two step process

1. You contact the credit card company who then calls the merchant and sets up a time to do a three way call while the merchant gives pertinent information (item that was ordered, date and time of the order, shipping addresses, ip address the order was made from, email address on the order etc.) Having this simple step would eliminate the honest mistake of people not remembering the company name when it shows up on their statement.

2. If customer still says the charge is not them then it goes to 3rd party mediation. Mediation is paid for by the loser of the case. The merchant would want to be sure that his info was accurate and that looking at the info he believes that the charge wasn't fraudulent before he paid for the mediator. The customer would most likely either drop the case if friendly fraud or if real fraud would go through with mediation. They have mediation now but it requires far more info than any online seller would have (requires signature confirmation on the order which is not cost effective to ship all items with just to stop the friendly fraud unless the item is worth hundreds.) Currenty the mediation cost is also astronomically high so it isn't worth it to take a chargeback to mediation as a merchant.

+1- "I never got it!" says the customer with tracking info confirming that they were delivered $400 in textbooks.. ugh....
 

100speed

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Literally all you can do is reply to each and every chargeback you receive. Send all the pertinent info and hope that the credit card company sides in your favor. It sucks! The online chargeback system needs to be redone as I lose far more money to people with friendly fraud than I do actual scammers.

The main issue is credit card companies care more about their customers than they do about the truth or whether they take money from merchants. The only way the issue would ever get fixed is if huge merchants (Amazon, Walmart, etc.) can get the CC companies to apply a better system. IMO filing a chargeback should be a two step process

1. You contact the credit card company who then calls the merchant and sets up a time to do a three way call while the merchant gives pertinent information (item that was ordered, date and time of the order, shipping addresses, ip address the order was made from, email address on the order etc.) Having this simple step would eliminate the honest mistake of people not remembering the company name when it shows up on their statement.

2. If customer still says the charge is not them then it goes to 3rd party mediation. Mediation is paid for by the loser of the case. The merchant would want to be sure that his info was accurate and that looking at the info he believes that the charge wasn't fraudulent before he paid for the mediator. The customer would most likely either drop the case if friendly fraud or if real fraud would go through with mediation. They have mediation now but it requires far more info than any online seller would have (requires signature confirmation on the order which is not cost effective to ship all items with just to stop the friendly fraud unless the item is worth hundreds.) Currenty the mediation cost is also astronomically high so it isn't worth it to take a chargeback to mediation as a merchant.
If you use paypal they guarantee your costs if you can provide adequate shipping information so USPS for physical products ,as for digital products - your on your own there my friend.
 

eliquid

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My partner deals with this in our SaaS we have together ( digital good ).

We don't use Paypal as Paypal will mostly side with customer on digital goods for the most part, but our processor we use right now ( Stripe ) is really good about informing us about the disputes as they come in.

We round up everything we can about the customer and charge and purchase. Probably the best thing we have is activity logs of when customers come into our site, purchase, confirm their email, and use our product. We also have tickets anytime they reach out to us for help.

Submitting all of that and explaining how the customer signed up, their IP, and their activity on the site helps us win almost every single case like this.

The only time it doesn't is in the case of pure fraud such as when someone has stolen a card and then ran a transaction against us to test the card. We have better rules in place now for that with Stripe and some custom coding I did with other databases.

However, the friendly fraud issue you bring up needs to have records of everything if you plan to fight it. Also Paypal tends to almost always side with the customer in digital goods unless it something like hosting.
 

SquatchMan

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My partner deals with this in our SaaS we have together ( digital good ).

We don't use Paypal as Paypal will mostly side with customer on digital goods for the most part, but our processor we use right now ( Stripe ) is really good about informing us about the disputes as they come in.

We round up everything we can about the customer and charge and purchase. Probably the best thing we have is activity logs of when customers come into our site, purchase, confirm their email, and use our product. We also have tickets anytime they reach out to us for help.

Submitting all of that and explaining how the customer signed up, their IP, and their activity on the site helps us win almost every single case like this.

The only time it doesn't is in the case of pure fraud such as when someone has stolen a card and then ran a transaction against us to test the card. We have better rules in place now for that with Stripe and some custom coding I did with other databases.

However, the friendly fraud issue you bring up needs to have records of everything if you plan to fight it. Also Paypal tends to almost always side with the customer in digital goods unless it something like hosting.

That's a pretty good solution for the problem. There is even a potential SaaS business buried in there if you look hard enough.

Offer a service that generates a report with all customer activity logs, help tickets, and any other customer relationship when requested. Have it generate a letter that details each encounter. Combine this with a nifty "Percent chance of reversing the chargeback." and you got yourself a nice SaaS business. You can call it, "NoChargeBack"
 

loop101

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Create a SaaS business that acts as a database for problematic customers. If a business customer gets a return on a digital product, then they submit the shoppers name to your site. Before they make a sale, they can query your database to see of they should allow the sale. If enough businesses use your site, you could build a decent list of bad customers. Your business customers could upload their history of returns for some credit to use your system. Basically, create a registry of bad customers.
 

MidwestLandlord

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This is really common in B&M too. Adds a full 1-2% to my credit card costs in some locations.

Make sure the name that appears on their credit card statement indicates who they bought from in a way they can understand.

I've seen business owners have some random LLC name on their CC processing contract, which is what shows to their customer, and the customer disputes it not knowing what it is.

Not sure about online processors, but B&M processors will allow you to adjust the name.

Mine has: Brand Name; Main Product; Telephone #

Like this: "ABC INC; Kitchen Products; 800-XXX-XXXX"
 

G-Man

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I've seen business owners have some random LLC name on their CC processing contract, which is what shows to their customer, and the customer disputes it not knowing what it is.

Been there. Had to change the name on the processing to the name of the product. People were seeing some random obscure company name on their statement and just assuming it was fraud... I seriously almost charged back MJ when I saw Viperion Corporation on mine. :rofl:
 

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MidwestLandlord

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Been there. Had to change the name on the processing to the name of the product. People were seeing some random obscure company name on their statement and just assuming it was fraud... I seriously almost charged back MJ when I saw Viperion Corporation on mine. :rofl:

I re-branded last year from a name that had my main product in it, to one that didn't.

My chargebacks shot through the roof. That's when I put the product in to show on the customer's statement.

Lesson learned haha.

The rest now are just actual fraud, especially since I have NO WAY to prove the customer made the charge on about 50% of my CC sales.
 

MJ DeMarco

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I found this article

Really? You "found it?" So your first post is a lie.

Do you think deception is a good way to reach out to your business target?
 

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