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  1. #1
    SitePoint Zealot Kakki's Avatar
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    CHargeback - Do I have any recourse with authorizer?

    I'm have a CC Merchant account and accept CC online through hand processing on my own credit card machine. I've never had a problem of any kind.

    Last spring someone from Greece ordered three shirts from my store. I processed the card manually and for "zip code" punched in 99999 which signals an international address.

    The purchase was approved and I sent the merchandise (worth a bit over 100.00)

    Last week I received notification from the credit card company that this was going through chargeback processes. The owner of the card lived in Tennessee and had never used her card on the internet. Apparently someone used her card number to get the merchandise and the card company was now taking the money from my account to reimburse.

    I understand this from a customer point of view. Her card number was stolen and used fraudently.

    However, the authorization company authorized this card to a foreign address through my manual processing. Do I have any recourse with the authorization center do you think? I would think they are partly responsible for giving me an authorizing code.

    Any ideas? I faxed the invoice, address of the "customers" shipping along with my explanation of the authorization process to the credit card company and haven't heard back.

    Am I the one that loses here? I've lost the merchandise, the money and the chargeback fee.

  2. #2
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    Hi,Kakki,

    This is a seriouse problem for all online businesses. I had a long conversation with my credit card authorization company and my bank.
    The authorization company only checks if the card is active and has the money. They are not responsible for anything else. Nobody can check who used the card.
    In the case if a "real" owner says that the card was used without his permission, he writes the affidavit where explains the situation and the money MUST be returned to him. You can not do anything unless you have the client's signature on the invoice. It is impossible to have it, because you are selling the stuff online.
    I had an advise from my company. It does not work 100% in all cases, but anyway, - if you suspect certain order to be fraudelent, you can ask for the copy of the card's both sides to be FAXed to you by the customer. Here at least you will communicate with the client and can see if his e-mail is fine and if you get the response or/and FAX from him - less chances to have the chargeback. Even if there is a chargeback - you have the signature to try to prove that the order was made correctly. But, again, it does not work 100%. Sometimes card's copies can not prove the order to be valid.
    Yes, in the case of a chargeback, the seller is the one who has all the losses.
    Last edited by Vlad; Oct 29, 2001 at 17:10.
    Vlad
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  3. #3
    SitePoint Zealot
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    It works like this...

    Company X, issuer of MS/Visa/AMEX/etc... has customer John.

    Company X likes getting the interest off of John's many purchases.

    Revenue from customer: possible 10-20%
    Revenue from merchant: less than 3%

    How many math majors does it take to figure out which one they'll kiss up to?
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  4. #4
    Payment Acceptance Expert jconley2's Avatar
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    Kakki,

    You can further reduce the chances of fraud and chargebacks by as much as 29%, according to VISA, by requiring customers to input the 3-digit CVV (Card Verification Value) number off the back of VISA and MasterCard credit cards. The 3-digit number appears on the signature strip on the back of the card. Both online and retail merchants should require these at checkout, not only does it reduce chargebacks and fraud it may even give you a bit more leverage should one "slip through the cracks".

    Doing the above would probably be a more feasible route to go then requiring people to fax in a copy of their credit card. It's less of a hassle and wouldn't drive customers away.

    Another good way to verify orders, in addition to the above, would be to make a call to the number the customer supplied to verify the order. This is something you can do since you manually run credit card numbers through.

    You might also want to contact a lawyer from Bank Card Law (http://www.bankcardlaw.com) These guys specialize in issues regarding to merchant accounts, including resolving chargeback issues.

    Hope this helps some!

    To your success,

    Jim Conley II
    Your Payment Acceptance Expert
    Last edited by jconley2; Oct 31, 2001 at 08:58.
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  5. #5
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    Jconley, is the CVV number something you would ask for on all orders? Is this common? I have never heard of this. I am setting up an e-commerce site, and I am very interested in this.

  6. #6
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    Most of the items I plan to sell on my e-commerce site will be in the $15-$50 range. Is it possible to set up my cart so that more security measures will be required for orders over $100?

    I don't want to get burned on a big order. But I don't want to make things difficult for the majority of my customers.

  7. #7
    Payment Acceptance Expert jconley2's Avatar
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    The CVV isn't widely as seen as it should be, though I have seen it several places a while back. I would talk with your merchant account provider about how to setup the field on your order form so when the transactions go through it runs the CVV number through, also. It's great for picking up fraud since most theives only take the card number, name on card and exp. date of a fraud victim. It can also aid in reducing chargebacks also.

    The less fraud you have to contend with, the better.

    Don't know anything about the 2nd part of your question on better security for orders over $100. You could say that before an order over $100 is to be filled that you will be calling the customer to confirm the order. Not sure if that's something you'd want to do or not.

    To your success,

    Jim Conley II
    Your Payment Acceptance Expert
    Get FREE copy of "Top 3 Merchant Account Pitfalls REVEALED" -
    http://www.discount-merchant-account.com
    Touch-Tone Credit Card Processing - $39 setup & $5/month


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