The Internet is hot with evil doers wanting fast money at the expense of anyone’s credit card balance. These spawn of satan really make it hard for the do-gooders, like us, to focus on making honest money. No, instead we have to spend our valuable time fending off the attacks of those with lower ethics instead of selling the products/services that make us successful.
For the last two months I have been very discouraged at the number of fraudulent orders that have been placed on our company store Twin Cities Technology Equipment (http://www.tchightech.com). We have been aggressively marketing our products from this store on Google Adsense, Google Base, Froogle, ebay, Price Grabber and few other places. Our click rates have been decent and we’ve manage to sell a number of units. Two months ago we received an order placed from Singapore for roughly $4k. We thought that it was highly suspicious and upon further investigation found out that the credit card that was being used was stolen. Okay, no problem. We caught that trickery and realized that we need to really be on the alert for others like it. Within the following weeks we received a number of new orders that appeared legitimate, mixed in with orders that were ridiculously fraudulent. We kept killing the fraudulent orders and sent back e-mails to these fraudsters saying that “lying makes the baby Jesus cry!” in hopes that what little morality they had will be perked by the thought of baby Jesus crying. Aparently the baby Jesus crying had no affect on them for they kept placing fraudulent orders.
After some analysis on what we were doing wrong, I recalled that we don’t ask for the credit card CVV2 number (on the back of most credit cards) during the checkout process. Our bank wanted to charge us extra for this feature and I stupidly declined. I figured that we would try not having it to see if it was an issue. Hindsight is 20/20, of course, and I learned a valuable lesson that I hope that everyone can learn from. We have since switched over to use Paypal Website Payments Pro, which requires the CVV2 number.
While this did prevent further fraudulent orders from the particular syndicate that was attacking my store, I am still feeling the sting of their bite. Last week I received a notice from my bank saying that a customer of mine is charging back their order because they didn’t place it. I was shocked because I know we double checked the incoming orders to make sure they weren’t fraudulent, or so I had thought. What happened to us was a distraction technique that caused us to focus on the obvious fraudulent orders while the fraudster placed little orders that were very legitimate looking. Upon further investigation, we found that the IP address associated with the fraudulent orders was the same IP address associated with two other orders we thought were valid. THE BASTARDS!!
These theives are smart and can cost us not only in time, but also in our hard earned money. Nothing feels more gut wrenching than when someone steals your money. I never want this to happen to me again and I for sure want to prevent this for my customers, so I have commissioned my group to develop a rating system for Renown Merchant (http://www.renownmerchant.com) that will analyze incoming orders and determine how likely the incoming order is fraudulent. We will also have a tutorial on how to prevent fraudulent orders and what to do when you have a fraudster knocking on your door.
Please let us know if you have fraud stories that might help out the community of online retail and wholesale companies.
