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Payment Fraud Prevention For Small Businesses: Building Your Line Of Defense Against Consumer Committed Fraud

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We had invested into a small retail outfit selling outdoor hobby items on the internet. The target audiences were those teenagers and young hobbyists who are often less mature but clever enough to play dirty tricks through taking advantage of the loopholes along the payment process. Having to eat the losses from time to time, we made up our mind in changing the entire way of handling sales and payment and were then successfully cut down the defraud rate by almost 90%.


Why do you need to be so concerned about consumer committed fraud? Because consumer committed fraud is a major source of risk for small businesses doing business in the online world. This book was written basing on real life experience fighting fraud. The goal of writing this book is to share our experience with you. We want to tell you how we have protected ourselves from consumer fraud, and how you can achieve the same. Instead of going highly technical, we wrote this book in such a way that it would be an easy-read for you, that you can use the techniques right away for your fraud prevention effort.


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<< Table of Contents >>

END USER LICENSE AGREEMENT
PREFACE
MANAGING FRAUD RELATED RISKS
HOW COULD YOU BE DEFRAUDED THROUGH THE CREDIT CARD SYSTEM?
Credit Card Chargeback
Cybershoplifting
Chargeback reason codes
Disputing Chargeback
Goods never delivered
Goods not as described
Stolen card
Why's the "not as described" claim invincible?
Why would the credit card companies rule in favor of the consumers most of the time?
Satisfaction Guarantee
Customer perceived quality and expectation
Paypal in the equation
Frozen Paypal account
To ship or not to ship with a frozen account
How could you be defrauded through other means?
Handling foreign checks
So how could I get these fraudsters executed?
Fraud VS Scam
The element of fraudulent intent
HOW BAD COULD THIS BE?
Merchant account getting shuttered down ...
Conducting Impact Analysis
HOW OFTEN COULD IT HAPPEN, AND HOW CERTAIN IS IT?
Product nature and the corresponding risk level
Profit and loss
Calculating your loss expectancy
HOW COULD SUCH RISK BE MITIGATED?
Background-check your customers
What to do if there is a match
What to do if there is NO match found
Say "No" when necessary
Shipping to a different address
In-depth background check
Trading big ticket items
Signature options
Proof of delivery
Signature validity
Beware of minors
What if he pays by check?
Check verification
Forged check
Check bouncing
Check by fax
Against the "item not as described" claim and the "item damaged" claim
So would it be safer through item pick-up in person?
Justifying the extra workloads
CALL FOR HELP FROM THE POLICE FORCE





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Sample Text:

I am not trying to scare you here, but these are what could happen if you sell and deliver goods to a fraudster:

Through a carrier you delivered a computer to a fraudster. The fraudster used the computer extensively for a month or so, then called his credit card company to file an "item not as described" dispute, accusing you of shipping a computer of inferior quality to him. The credit card company issued him a refund before he returns the computer to you.


Through a carrier you delivered a computer to a fraudster. The fraudster took all the expensive parts out of the computer casing, then called his credit card company to file an "item damaged" dispute, accusing you of shipping a non-functioning computer to him. The credit card company issued him a refund before he returns the computer to you.


Through a carrier you delivered a computer to a fraudster. He asked his friend to wait right in front of the doorway and impersonate him to sign for and collect the computer. Afterwards, he called up his credit card company to file an "item not received" dispute. The credit card company issued him a refund so he had both the money and the computer.


Through a carrier you delivered a computer to a fraudster supplied address which is different from his actual billing address. He then called up his credit card company and claimed that he had never authorized such a purchase. The credit card company issued him a refund so he had both the money and the computer.