stevenjm
Joined: Eons Ago
# Posts: 824
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Posted: 2004-May-26 05:59
Working on a site thats nearly ready to go live and am trying to chase online credit card
fraud statistics before I invest in merchant account etc.
Banks are playing dumb and telling me they do not have figures ...Yeah right.
Interested in knowing average percentages for fraudulent transactions on small moderately priced electrical goods or similar.
Thanks for any help.
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stevenjm
Joined: Eons Ago
# Posts: 824
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Posted: 2004-Jun-05 04:03
I'll settle for rough estimate of bad transactions for mail order type goods.
Anyone?
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stevenjm
Joined: Eons Ago
# Posts: 824
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Posted: 2004-Jun-07 06:55
125 views and not even a comment?
OK - how about anybody at alls credit card chargeback figures for anything sold online.
I have searched and cannot get a reliable figure - some quote average figures for cc chargeback as 1.1%(from gartner group) others quote 15%(from gartner group)for overall chargebacks on online transactions. I can't find original gartner group info. Which figure is more likely?
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rackaid
Joined: Oct 27, 2003
# Posts: 87
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Posted: 2004-Jun-08 15:03
You will need to distinguish between fraudulent chargebacks vs. regular chargebacks. Somtimes businesses can not settle differences with a client and the client issues a chargeback -- such numbers are often not included in fradualent chargeback stats.
The Merchant Risk Council did a small survey in 2003 and found that only 9.7% of merchants had a chargeback rate of more than 1.0%.
http://www.marketwire.com/mw/release_html_b1?release_id=62565
From talking to some peers at a small biz meeting, I found that generally chargebacks are higher (3-5%) when using a 3rd party processor, e.g. Ibill, 2Checkout, PaySystems, versus your own merchant account (<1.5%). The reason is that people do not recognize the charge and dealing with some payment processors can be tedious. In the end, they just request a chargeback.
The use of address verification is essential to limit the number of false charges. Also, I would urge you to scrutinize all international orders carefully. Also, scrutinize all bulk orders.
If your chargeback rate is much above 1%, you will soon be eating into your profits. Dealing with chargebacks can be time consuming, especially if you try to find out why the chargeback was issued, handle customer relations, etc.
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stevenjm
Joined: Eons Ago
# Posts: 824
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Posted: 2004-Jun-08 23:26
Thanks very much for that info. The site will be for AU customers only and using my own merchant account.
I got very nervous when the site was accidently picked up by se's before being ready and purchases were attempted - the first one being a cc from US with delivery to Vietnam. This gave me a scare as to what I would possibly be looking at when the site is fully functional.
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PCInk
Joined: Sep 13, 2001
# Posts: 479
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Posted: 2004-Jun-09 10:58
Early on you will get a lot more fraud attempts - they prey on new sites (that generally have less experience in fraud spotting).
The percentage of chargebacks will vary. I had fraud attempts ranging from 20% in some months to 0% in others. It also varies from trade to trade by a huge amount. Generally, the easier to sell your product on, the higher the fraudulent attempts.
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stevenjm
Joined: Eons Ago
# Posts: 824
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Posted: 2004-Jun-09 12:40
Thanks. Thats what I'm worried about - the products I sell would be very easy to resell and are small items with a moderate value.I probably could not have chosen a worse product as far as meeting fraud product requirements.
Any recommended fraud spotting articles ?
is cvc number advised for sales with cc or does this reduce legit sales as well?
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rackaid
Joined: Oct 27, 2003
# Posts: 87
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Posted: 2004-Jun-09 14:14
I assume most customers are familar with the cvv2 number but the fraudsters often have that information.
Two things that really help. Require phone verification for a shipping address that is different from the billing address.
Do not accept orders from free email accounts. Require an ISP account.
Watch for repeat orders with the same or similar shipping addresses.
Make sure your software includes the ability to detect the buyers IP. The latter can be useful to spot novice fraudsters who connect through the same ISP.
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stevenjm
Joined: Eons Ago
# Posts: 824
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Posted: 2004-Jun-09 23:35
Thanks for the tips. I have the site setup to detect and log ip. is it best to refuse unknown ip orders or combine with other factors before making a decision.
Do you state on the payment page that phone verification is neccesary for orders with different shipping address or state that they must be the same?
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charlitos
Joined: Jun 18, 2004
# Posts: 3
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Posted: 2004-Jun-18 22:15
Hello, my first posting.
I helped for almost two years with an adult tangible products website (adult products are supposed to be a very high risk type of product) and the owner told me that they had only one chargeback in thousands of sales. I suppose tangible products are less risky than dowloadables for adult.
They always used third party processors which in most cases have developed fraud screening automated system.
I think also the 0 resell value that this products have may influence.
Carlos
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stevenjm
Joined: Eons Ago
# Posts: 824
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Posted: 2004-Jun-18 23:53
thanks Carlos - its a worry as so far even though the site is not proccessing cc's people are still trying to purchase and over 50% of them are quite obviously fraudulent.
(the obvious ones however have all been from overseas even though the site clearly states its for AU customers only)
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