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Preventing online payment fraud

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Re: Preventing online payment fraud

#11

Post by Silhouette »

jib wrote: post #5
erangalp wrote: post #3

Earlier quoted context omitted.

I am the author of the article - thanks for the positive overall comment. I agree with you to a point regarding "buyer's remorse" - perhaps I didn't word it strongly enough. For some products, what you say makes perfect sense, but for us, since what we sell are code licenses, you can't 'undo' what you learned by using the code. Regardless, we offer 14-day money-back guarantee, and people still sometimes choose to tak…

Loved the write-up. If you expand outside paypal/ccs into other methods like direct debits (common for Germany) I would be curious to hear similar stories. Accidental chargeback rates are way up on direct debits so any stories for dealing with that efficiently would be very interesting. One thing I didn't really see was "previous successful purchase" - that should be a strong indicator of "not fraud". Even if other d…

If you expand outside paypal/ccs into other methods like direct debits (common for Germany) I would be curious to hear similar stories. Accidental chargeback rates are way up on direct debits so any stories for dealing with that efficiently would be very interesting.

Would you mind expanding on this, please? We're looking at different payment possibilities for a start-up and direct debits is one method that we are considering. This is the first time I've heard of a much higher chargeback rate on such transactions, though.

Re: Preventing online payment fraud

#12

Post by AkThhhpppt »

jasonlotito wrote: post #10

It's a good article. I'd like to add two other things you should consider when handling credit cards. The first is 3DSecure (or VbV). They are the most secure ways to accept credit cards, though they aren't as easy for users to use. However, they do go a long way to protecting the merchant. If your handling b2b transactions that are high risk, you might consider enforcing this. Again, it's not a solution to wield lig…

Counterpoint: the only businesses that force VbV etc. I will deal with are airlines (because they all do), which meant the last time I flew transatlantic I took 800 euro out of my bank account and _walked_ to Air France's bank rather than use it. In _any_ other industry? They've just given my business to a competitor.

It is not in my interest to use a service _designed_ to lessen my protection from fraud.

(see http://www.lightbluetouchpaper.org/2010/01/26/how-online-car...)

Re: Preventing online payment fraud

#13

Post by erangalp »

jasonlotito wrote: post #10

It's a good article. I'd like to add two other things you should consider when handling credit cards. The first is 3DSecure (or VbV). They are the most secure ways to accept credit cards, though they aren't as easy for users to use. However, they do go a long way to protecting the merchant. If your handling b2b transactions that are high risk, you might consider enforcing this. Again, it's not a solution to wield lig…

The Minfraud service I mention in the article has an automatic phone verification system. You can use it when the risk score crosses a certain threshold

Re: Preventing online payment fraud

#14

Post by Cherian_Abraham »

Online fraud is expected to grow substantially in the near future, as e-commerce and CNP (card not present) transactions are expected to grow exponentially in relation to offline (or Card present).

With card issuers planning to issue Chip cards (to stay in compliance with Visa's EMV Mandate), fraud will shift from retail to Online (where Chip offers no additional protection), as it has already happened in Europe with the EMV shift there.

Re: Preventing online payment fraud

#15

Post by npsimons »

jonnathanson wrote: post #9
patio11 wrote: post #2

This article is amazingly worth your time. Endorsement out of the way I have one quibble and some elaboration: I don't exactly love conflating buyer's remorse with payment fraud, since buyer's remorse is a psychological phenomenon and happens independently of fraudulent intent. Then again that's a bit hairsplitting. So, you're a digital goods business. What can you do to reduce the odds that a customer requests a tra…

Fantastic and informative comment, as usual. That said: "a great way to avoid getting emails by someone whining about getting a refund for the $8 they spent on your ebook is to never ever ever ever ever do business with people at the $8 price point." I have one of those "yes, if," or "no, but" reactions to this statement. If you're doing business at the $8 price point, you should be doing it in the volume business. T…

[1] Temporarily leaving aside, for the sake of everyone's collective sanity, any tangential philosophical debate about whether $8 is a "low" price.

Here's a question: we all know about reducing the price point to garner more sales, and therefore more profit; has anyone done similar studies on what price point elicits the least number of refunds (especially due to buyer's remorse)? $8 seems "low" to me, but only for some items; I suspect that most eBooks wouldn't meet this criteria (although I have payed an order of magnitude more for eBooks and still have a minimal Safari subscription). An eBook at $0.99 I wouldn't see the point in getting a refund, no matter how easy it would be to get it. If it was a really bad book, I might go after the refund just to make a point, however.

Re: Preventing online payment fraud

#16

Post by adambenayoun »

npsimons wrote: post #15
jonnathanson wrote: post #9

Earlier quoted context omitted.

Fantastic and informative comment, as usual. That said: "a great way to avoid getting emails by someone whining about getting a refund for the $8 they spent on your ebook is to never ever ever ever ever do business with people at the $8 price point." I have one of those "yes, if," or "no, but" reactions to this statement. If you're doing business at the $8 price point, you should be doing it in the volume business. T…

[1] Temporarily leaving aside, for the sake of everyone's collective sanity, any tangential philosophical debate about whether $8 is a "low" price. Here's a question: we all know about reducing the price point to garner more sales, and therefore more profit; has anyone done similar studies on what price point elicits the least number of refunds (especially due to buyer's remorse)? $8 seems "low" to me, but only for s…

I have no idea how this is working with the app store but I know that on the Android play store to request refund was not simple. Now you'll have to get out of your comfort zone for let's say $0.99-3.99 - something you wouldn't even consider (your time is more valuable). Disputing that charge is even much more a time sink than asking for a refund as you would have to probably sign on several forms and fax them back to your credit card company, then you always have the possible cost of the chargeback being denied (I know my CC impose a penalty of $10).

I would say anything beyond $10-20 would be worth figthing. Of course it depends on where you are located (I would imagine someone in a poor country more likely to fight for a $5 refund than in a rich country), and your socioeconomic class (as I would imagine that a 18 unemployed year old would more likely ask for a refund than a 45 year old professor at Standford).

Just my 2 cents.

Re: Preventing online payment fraud

#17

Post by bdwalter »

Take a look at realtime device identification and shared reputation services. This allows you to uniquely identify the end user devices accessing your site and assess their reputation and fraud history across a shared network of intelligence. Services like http://www.iovation.com are massively effective at fighting fraud.

Re: Preventing online payment fraud

#18

Post by adrianwaj »

Well, I am thinking of selling goods in the future. It'll be bank transfers or bitcoins. Simple.

add: if someone worries about if I have the goods or will ship, I'll offer to take a photo of me holding them next to that day's newspaper and have some testimonials up on the site. Simple.

Re: Preventing online payment fraud

#19

Post by brandonb »

This article has great advice. I work on fraud detection, and a lot of companies start off by building basic checks like AVS, CVV, proxies, IP-billing location mismatch, etc. What usually happens afterward is that the fraudsters get more clever. For example, we've seen sites implement SMS verification, but then the fraudsters will set up Twilio phone numbers to fool it. The sites block IPs, but then fraudsters go through an internet cafe or proxy. Sites shut down one account, and the fraudsters rent a bot net and run scripts to create a thousand more. It's a cat and mouse game.

Companies where payments are central (e.g., PayPal, Square) end up building some combination of machine learning, investigation tools, a dedicated operations team to review/verify suspicious transactions, and custom logic to look at all sorts of signals correlated with fraud. Often they'll have dozens or hundreds of people working on this.

For everybody else, I'd echo Eran's advice to just outsource this. There are plenty of vendors out there. Here's one list: https://www.merchantriskcouncil.org/index.cfm?pageId=702

If anybody out there is dealing with fraud or chargebacks, my company (Sift Science) provides an API to do exactly the checks Eran's article suggests and a lot more. Even if our technology doesn't apply, I'm happy to just give advice and point people in the right direction. My e-mail is brandon@siftscience.com.

Re: Preventing online payment fraud

#20

Post by jacques_chester »

adrianwaj wrote: post #18

Well, I am thinking of selling goods in the future. It'll be bank transfers or bitcoins. Simple. add: if someone worries about if I have the goods or will ship, I'll offer to take a photo of me holding them next to that day's newspaper and have some testimonials up on the site. Simple.

Some bank transfers can be reversed.
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