Home – New Forums Money matters Visa charge-backs on Merchant account

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  • #973953
    JenG
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    In April I had a moderately large sale to a man in Venezuela. I duly sent off the goods and heard nothing more. In mid-May the ANZ where I hold my Merchant account wrote me a letter saying the owner of the card had disputed the amount. They requested I send all relevant documents. That’s easy, they are all there in the back end of my website. I did that, and added that I had heard nothing further from my customer and the goods had not been returned. Heard nothing further but yesterday I checked my account. On the 17th the ANZ charged back the amount against my A/c.

    I phoned them and they said I did not have a signature. No, it’s an online business and Venezuela is a long way away. He then said the card had been used fraudulently. Does that mean the millions of online businesses have to carry the cost of fraudulent use of cards because they do not have a signature?

    The upshot is, they are referring it back to the “charge back team.” I have said that I will close my merchant account and three other savings accounts for my grandchildren if this money is not returned to my account. I will also speak to Visa. It may be that I will only accept Paypal on my website if ANZ get away with this.

    It’s hard to make a quid with the banks charging a fortune to hold a merchant account, and Eway “the secure payment gateway” also charging a percentage of every sale, without Visa holding me responsible for fraudulent card use.

    Anybody been through this exercise in the past, have any suggestions for me?
    Jen

    #1065188
    Past-Member
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    I’m sorry that you have had this experience, however my suggestion would be to only deliver to the UK, US, Can, NZ and Japan perhaps or whatever you find is ok. There is so much fraud around.

    Every day I get spam asking me if I ‘deliver or send’ to countries known to have fraudulant activities.

    Although I have a merchant account I only use PayPal only for overseas sales – the reason being if the money doesn’t get transferred I know it’s not a genuine sale. Never send anything until the money is in your account and cleared.

    #1065189
    JenG
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    Thanks Karen, that’s good advice.

    I always thought once it had cleared Eway, it was secure. It’s supposed to be a secure payment gateway. Do I have any comeback on Eway I wonder? I pay fees on every transaction, so that must count for something?

    Anyway, thanks for your advice, much appreciated.

    Jen

    #1065190
    SalenaKnight
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    Even using Paypal doesn’t guarantee anything.
    https://www.paypal.com/au/cgi-bin/webscr?cmd=xpt/Marketing/securitycenter/sell/ChargebackFAQ-outside

    If you’re using Eway, I’m told (I don’t have it), that you can see how many times a person has tried to pay for their items, using different cards.

    We only allow orders under $100 to go o/s if it’s by Paypal – other than that we make them bank deposit.

    Of course there are exceptions – 1 Singapore-based customer has us ship to her sister in Australia, but even then, we rang to confirm and got a scan of her license sent bank before we sent the order.

    I think any legitimate customer would understand if you go a bit further to verify their identity.

    ETA – always try googling their name and address. There are several forums where repeat offenders are posted.

    #1065191
    JenG
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    Thanks I didn’t know that about Eway.

    It’s starting to look like nothing’s 100% secure. I’m such a newby to all this.

    Approx 50% of my sales are to o/s countries, mainly the US but I’ve had quite a few to the Middle East, without problem. In fact this has been my first problem. I still can’t quite believe the bank want me to be held liable.

    I will be seeing my sales with fresh, but more cynical eyes from now on.

    I’m off to check out your link now, thank you.

    Jen

    #1065194
    JenG
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    Thanks Miss Julie, for your commisserations and advice. I hadn’t thought of it being a tax loss, I guess it would be.

    But I still think it’s unfair. It’s not as though we online merchants can tell that a card is being used fraudulently, we do everything we can security wise. I would have thought my fees and charges (exhorbitant on a small business) would have covered this amount within a couple of months. If I don’t succeed in getting this amount back into my account, and go elsewhere, it’s the last they get out of me so it would pay them to carry the cost.

    We’ll see. Right now I’m pretty fired up about it. I think I need another coffee…decaffeinated! ;)

    #1065195
    EFTPOSCO
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    Hi There,

    Nice site!

    Bit of a tough situation, generally the merchant carries the risk in these situations. Best thing to do is to have a limit on the transaction or maybe have a secure postage service if posting o/s or anywhere really so that the signature is captured at time of delivery, and ID is also produced. This will cost a bit more but if the customer is paying for postage then it isnt really a burden on your business. And will ensure that all payments and customers are genuine that way. Another avenue to look at is insurance on items and transactions not to sure on this one but worth looking in to.

    another option is when doing a higher than normal sale (you will know your average ticket size) then the customer needs to provide id and more info so as to confirm the transaction and that they are who they say they are, and if this situation comes up again you can then provide more detail to the bank for any disputes.

    Hope this helps. But as for the current situation the only thing you can do is have ANZ/Visa reverse their decision. Or do you have business insurance for stock? As this is now classed as stolen goods.

    Regards,

    Anthony

    #1065196
    JenG
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    Thanks Anthony. I had no idea the merchant generally carried the burden in these circumstances. I just had an email from a friend who’s daughter’s Visa was hacked into and she received a call from the bank asking her if she was in the US at the moment. No, Melbourne. All up $1900 has been racked up on her card but the bank assure her if she comes in and fills out the relevant forms, they can get her money back. Same bank as mine. So they can do the same for me, I’m hoping!

    It’s a huge hassle to change banks but I will because I consider that taking the money out of my account without any notification or explanation, is wrong.

    Yes, I will be much more careful with sales over a certain amount from now on. And won’t be averse to asking the customer to scan their ID and email it to me first. That’s an excellent idea.

    Cheers,
    Jen

    #1065197
    EFTPOSCO
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    No worries,

    Hope it wasnt too much money!

    The fees you pay are simply a few that visa charge the bank for having the ability to process electronic transcations and their fees. The risk is always a merchant risk, unless you can provide the details as mentioned. “ID” with this said I’ve seen people stung by this as well. The banks look after the card holder more so than the merchant (the acquirer) as they are generally the ones benefiting from the transaction. So my advice would be to get stock insurance for these types of issues. But also ensure tighter restrictions on how you accept sales and from where. The other thing to be mindful of is if charge backs happen to much the facilities can be terminated by the bank. and this could ponentially ruin the business or have a lot of down time til the new merchant facilities are set up.

    This does happen a lot in certain industries (travel, online transactions, taxi’s and a lot of prepayment type businesses) So this is a bit of a hint to ensure your doing as much as you can to ensure the transaction is legit.

    Hope this helps.

    Cheers
    Anthony

    #1065198
    JenG
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    Thanks Anthony, I feel much older and wiser now. :)

    Stock insurance is something I’ve been thinking about for some time. Will get on to it.

    Jen

    #1065199
    JacquiPryor
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    Hi Jen,

    Sorry to hear of your experience!

    We do most things manually via an EFTPOS machine from online payments etc (so, no card holder present to physically sign) – our machine needs us to enter the CVV number of the credit card – does your online payment gateway ask for that? I thought this was a system everyone has started using for ‘security’ on these things? (I could be wrong).

    The other thing you could do, if the CVV number isn’t an option, or isn’t preventing the problem – but would be a bit of extra work, is to email your customers a copy of their receipt for signature and return before shipping the orders? Then you would have a signature as well as the rest of the order confirmation from the online shop?

    Just a thought.

    #1065200
    JenG
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    Hi Jacqui,

    The credit card information is not available to me as it’s a secure page, and I only know about the sale once Eway has notified me that it has gone through their security. Which is why I always believed every sale I received was safe.

    I don’t actually get a receipt the way it’s done on my site so I would have nothing for them to sign. I always thought that’s what Eway were for, taking care of all that end of the sale, leaving me to simply ship the goods without a care in the world!

    Not so, obviously. I do need to create a new system whereby anything dubious or very large amounts are not sent out before I have received some sort of ID from the buyer. Unfortunately most of my sales, the customer wants the goods yesterday.

    Thanks for your input Jacqui!

    Jen

    #1065201
    JenG
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    I am pleased to say that ANZ phoned me this afternoon and are going to replace the money.

    I now realise that there are some risks I have no control over and must take whatever actions I need to ensure this doesn’t happen again – though there are no guarantees.

    It may even require a re-think in my pricing because if it happens again, it’s unlikely they will cover the loss. I did make my point about helping themselves from my account without so much as a letter. She said they don’t have the resources to let everyone know when money is taken from accounts…..

    Thanks for all the input I received in this thread. What a great resource Flying Solo is!

    #1065202
    JaneB
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    Missjulie, post: 80850 wrote:
    I feel confident that paypal would look after an issue such as this. They have a good reputation for dealing with disputes such as this.

    Many unfortunate sellers would disagree with this. Google paypal with fraud or class action suit or scammers and a whole lot of issues come up which you may need to be aware of.

    Take care.

    #1065204
    swipefast
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    JenG, post: 80908 wrote:
    It may even require a re-think in my pricing because if it happens again, it’s unlikely they will cover the loss.

    That’s exactly right. Unfortunately, it’s a cost of doing business with anything other than cash.

    With what was said earlier about all the money the bank has made on fees on the account so far, in all fairness, it’s exactly the same for them. They have to make money on fees to pay for the fraud losses, and then try to make some profit.

    The only winners in these situations are the card holders and Visa/Mastercard. Those two parties never hold the risk. The merchants and the banks are the ones responsible for all the money from fraudulent transactions. If the merchant can’t pay, the banks have to.

    From the bank’s perspective, not only do they have to deal with merchants who have fraudulent customers, but they also have to deal with actual fraudulent merchants who sign up for accounts, then run phony transactions through without ever delivering any products, and close shop/withdraw their money before the chargebacks come in.

    That’s why the banks are quick to freeze/withdraw money when they see chargebacks. For all they know, it could be the beginning of a wave of them, and you could be doing it on purpose. Many small merchant banks have learned this lesson the hard way.

    It makes for a rough relationship. Merchants hate it, because in any other industry it would seem criminal. Banks hate it, because they know it peeves off their customers and hurts the industry. But the losses are real, and with Visa/Mastercard, someone other than the customer or Visa/MC has to bear the cost.

    The only real thing you can do in cases of chargebacks from non-fraud, is to understand this process, and use it to help resolve the issue with your bank. You may find funds held because of a chargeback, but if it’s not fraud, you can dispute that chargeback and satisfy the bank and Visa/MC.

    You’ll want to keep as much of a paper trail as possible. Invoices, signatures or another form of proof of acceptance of the charges, proof of delivery, purchase orders to prove you sent the item they requested, etc. With the right trail, you can at least protect yourself from customers who try to cheat you.

    But for protecting from fraud, like everyone here has said, it mostly comes down to not shipping to most countries unless you’re absolutely sure – or just charging more to cover the risk.

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