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Confirmed User
Industry Role:
Join Date: Sep 2002
Location: California
Posts: 1,187
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Quote:
Originally posted by psyko514
Just for the record, you're way off on a lot of things.
#1 - A chargeback does not mean the card was used without authorization. There are approx. a dozen reasons for chargebacks, including (but not limited to) services/goods not as described, credit not received, recurring charges not cancelled, merchandise not received, etc. Also, it can be something as easy as billing error. I've had multiple customers send me copies of emails stating their recurring membership (online, offline, adult, mainstream) has been cancelled yet they still get billed months later.
#2 - These one-click chargebacks don't mean the chargeback is immediately resolved in the favour of the customer. A chargeback is a complicated process. The customer disputes the charge with his bank. A letter is sent to the merchant's bank informing them of the dispute. In most cases, the merchant has 45 days to "represent" the dispute and provide proof that the customer authorized the charge. In the case of goods and services, it's as simple as showing a signed draft. In the case of internet/phone/mail orders, it's as simple as showing a delivery receipt signed by the customer.
#3 - Internet merchants providing an online service (memberships, selling traffic, content, design, etc) take a risk in doing business online. You cannot have a signed receipt and therefore you cannot prove the cardholder authorized the charge. IP logs are not enough. The only way you can prove the cardholder authorized the charge is by tracing the IP address to the customer's ISP. Then you have to subpoena the ISP and get them to release the logs to prove that the IP address you have was in fact assigned to the cardholder at the time he signed up for your site. Without that, you cannot legally prove the cardholder doing the dispute is the one who signed up for your site. With out legal proof, you're representment of the chargeback will fail.
#4 - I don't know how it works in the US, but in Canada, banks require a signed statement from the customer saying they never authorized the online charge. Some banks (ex. my bank, TD) require the customer to send a letter saying they never authorized the charge. Other banks send an affidavit to the customer which the customer must sign and return within 10 days.
#5 - Banks do not make money from a chargeback. Chargebacks cost an average of $25 to each bank involved in the dispute (the credit card issuer and the merchant's acquirer). Not only are there mandatory fees implemented by Visa Intl and Visa USA/Canada/Whoever, there are also paperwork costs and the cost of employees time. Also, the majority of banks will write-off charges less than $15-$25, which comes from their pocket. And sometimes, if the chargeback drags on for too long (ie errors on the acquirer's or issuer's part), they whole transaction is written off by the issuer.
#6 - A customer using his credit card does not necessarily translate to profit for a credit card company. The bank makes money one of two ways on a credit card. When a customer pays interest and when a customer uses his card at a merchant who acquires at the customer's bank.
#7 - Verified by Visa has taken a while to be implemented because it requires two things. Merchants who are willing and ready to implement it, and banks who are willing and ready to implement it. Once both of the above happen, we need customers who are willing to sign up for the service. FYI, the majority of Canadian banks will offer VbV by the end of this year. CIBC already does and TD will this fall.
#8 - I may not have the power to make decisions, but I do have the power to influence decisions. I implemented a pilot project to cut down friendly fraud at my bank, with the help of many IPSPs here. If it's successful, it's something that may spread.
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Psyko
Hey that all makes perfect sense to me, our own merchant account sends us notification of any dispute, non delivery, wrong items, refund requests and fraud. We don't get many but i am guessing out of every 10,000 transactions we get around 4 or 5 letters all are sorted out within days to everyone's satisfaction. so touch wood after running our own merchant account for 3 + years not a single chargeback and no refunds, all it takes is good admin and customer service.
This will always be a problem for webmasters using third party processing as not one single company we have used sends us an e-mail or letter re refund or access or chargeback situations. Ibill use to send an e-mail, but now they have stopped doing that over the last year or so. Without the ability to respond to chargeback claims how the hell are we ever going to help stop them. Members know that for the most part they can get away with it and billing companies in the main always come down against the adult webmaster because of actions of the webmasters who just want to rip off clients. My merchant account experience not only covers the USA but Europe where my company had accounts for 20+ years and i can confirm that banks in the UK also send out letters requesting reply's to possible fraud, chargebacks and undelivered produce. One action billing companies should start to take is to forward these letters re chargeback to each and every client to at least give them the ability to respond. I applaud your innovative actions in Canada and hope that some like minded person in Visa or Mastercard reads this thread and instigates some similar actions here in the states. One final thought is that Visa / Mastercard should start to make a much more visible stand against fraud, i realize this is an expensive undertaking but a few extremely well publicized examples of stamping down on CC fraud would go a long way to make members and webmasters realize that they are on the ball and online transactions can be as safe as in person retail purchases given the right company and the right security measures.
Cindyxx
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