Chargeback protection from deadbeat customers?

[alohaha]

Hi - I've had this problem for awhile, have tried several of the .cc vendors, they all say the same thing "we can't offer chargeback protection for intangible services" ..<br /><br />How do you guys handle customers that rip you off, eg join for a couple weeks then do a chargeback on the membership? <br /><br />it seems that unless they sign for a physical product, there's no protection..<br /><br />this needs to change .. what's the average percent chargebacks etc everyone gets?<br /><br />curious.. thx

[AgentCash]

Have you tried maybe selling a tangible product, and include the site membership as a bonus? Say a DVD of the month club where they get access to the site for buying. You can pick up the DVD's for wholesale at $1-$3 a piece, even less in large quantities. The main issues would be taxes, shipping costs, and local obscenity laws IMHO, but if you're willing to work through all that, then you'd probably qualify for a higher form of protection... (isn't that a trademark? something like "ARID Extra-dry... a higher form of protection...") <img border="0" title="" alt="[Big Grin]" src="biggrin.gif" />

[flyingiguana]

we're all getting assfucked because credit card companies are still living in the past. maybe they make more money from chargebacks than they do any other fees or interest. until they actually make some real changes, there isn't a whole lot u can do.<br /><br />but don't there cc processors take down ip info? if these people are logging into the site, match things up with their isp and go to the police.

[lisa-the-slut]

Surfcat,<br /><br />Charge Backs are just part of the business and should be factored into your monthly cost. <br /><br />There are basically two types of charge backs, Fraud & Friendly Fraud. What I mean by this is, Fraud is when the CC number has been stolen or the CC number has generated by a program. This type of fraud can be caught 85-95% of the time.<br /><br />Friendly fraud hurts the most!! Here is an example: Say Dick joins your pay site and stays as a member for three months. <br /><br />You probably would have billed this customer 4 times (The trial, and the three recurrings). <br /><br />Dicks wife looks at the credit card statement and sees the debit. She will ask Dick if he knows what this charge is. Of course Dick is going say NO. Dick is not going to tell his wife he joined an XXX site, but he knows exactly what the charge is for. <br /><br />Dick's wife then calls the phone number on the descriptor and inquires about the charge. She is told it is for an Internet Adult Web Site. She will then say my husband would never look at smut like that and demand a refund. <br /><br />If you don't give her a refund, she will have her issuing back refund the funds by charging back.<br /> <br />Sometimes the wife or husband will not call the merchant to find out what the charge is for. They just call their bank and say they did not make these charges and they could not get a hold of anyone to find out what the charge was for. The customer service reps. for Visa/MC, knows the charges are from an Adult site (All Adult Merchants have to register as a High Risk with Visa/MC). The issuing bank will charge back the funds from the merchant and Visa/MC will take a charge back fee ($10-$25 depending on your bank).<br /><br />Because you billed Dick four times, you get four CBs and a fine for each CB.<br /><br />This type of CB hurts the most because all your fraud screens would have allowed this transaction (AVS Match, CVV2 Match, IP address & host, etc.). Not only do you give all the money back you charged Dick, but you also have to pay the CB fines (4CBX$15= $60). So you now lost $60 on this customer. <br /><br />What if you paid an advertiser $35 for this sign up? You are now out $95 bucks!! <img border="0" title="" alt="[Mad]" src="mad.gif" /> <br /><br />Visa/MC charge back rate is 1% so you need 400 transactions just to offset this one customer!!<br /><br />To maintain a good CB rate you have to scrub and scrub hard!! <br /><br />Visa/MC make money from charge backs! They get there original transaction fee and the discount on the sale and then get the money from the CB fines. They make money both ways on the sale and the refund!!<br /><br />I am able to keep my CB down below 1%, but it is hard!! One thing that helps is using a gateway like Net Billing. They have been around for a while and handle a ton of adult merchants so they have a huge negative CC database and their staff will train you how to maintain a good CB rate. They also can handle your customer service so someone can take the calls or emails 24 hours a day. Having 24 hour customer service is one of the keys maintaining an 1% CB rate.<br /><br />What can you do its the adult industry??<br /><br />I did not mean to be so long winded <img border="0" title="" alt="[Smile]" src="smile.gif" /> <br /><br />Lisa

[AgentCash]

Boy... that slut knows her stuff! <img border="0" title="" alt="[Big Grin]" src="biggrin.gif" />

[Rui]

Nice and informative post lisa <img border="0" title="" alt="[Wink]" src="wink.gif" />

[LiveDose]

Nice post Lisa. That's about it in a nutshell. I have stopped using my merchant accounts for online intangible sales for the time being and rely on thrid party. Visa & MC are running a huge scam but unfortunately it will take a while to change because they are basically bully organizations. There are steps they could take to cut down on this but so much money is being made on chargeback fees that it is like a business unto itself.<br /><br />24/7 phone support is the utmost of importance to keep you Cb % low. Otherwise yes this is just part of this biz....<br /><br />LD

[alohaha]

hey Thanks, lisa, agent etc.. good ideas! Nice to know what we're dealing with.<br /><br />I like the idea of sending a dvd or whatever, that should help. Good to know re the 1% threshold, I didn't know that. plus the numbers on cb's per issue.<br /><br />Other feedback? What do others of you do to help reduce deadbeat chargebacks? <br /><br />Example: I sent a customer a video that he paid for, confirmed delivery via USPS del. confirmation, he never contacted me and just charged it back, trying to rip me off, but CSI wants a signature.. which means, I need to add $1.75/shipment for this??<br /><br />I am contacting his local PD, but that's a hassle, and his employer, should be good for something, but, I'd like to avoid all this bs if possible...<br /><br />thx lisa/agent/others again.. any other ideas? <br /><br />let's hear em:<br /><br />** WEBMASTER TIPS FOR AVOIDING CHARGEBACKS ** <br /><br />... (^_^) thx..

[AgentCash]

Yeah, always get signature confirmation, that helps a great deal to prove you actually shipped the item. You might try a collection agency for situations like that. They charge you 15-50%, but they only charge you for the charges they collect on.

[LiveDose]

I would also avoid the USPS at all costs. They are pathetic, their service sucks and you'll rarely have delivery error situations resolved. It's no wonder that they are probably the only monopoly on earth losing millions of dollars every year.<br /><br />They recently lost about $400 in prescription meds that had tracking and the whole nine yards on it. Dealing with them in the aftermath is just a hastle. Always go for signature confirmed delivery with UPS, FEDEX ground etc etc...

[unconnected]

Great post Lisa! That helps a lot..<br />Question though, does that gateway page that netbilling run to screen traffic hurt signups?<br />and has anyone used netbilling?<br />how effective are they?

[alohaha]

others? good points so far... how do you all deal with chargebacks, and about what percent do you get on average?

[basschick]

ccbill has a 24-7 customer service line. i believe so does globill. you can put the numbers inside your site.<br /><br />on the other hand, i promote two sites that i have sent hundreds of signups to. both are partnership. i have never had a chargeback with either, and i suspect that enough content that isn't plugins, and regular updates are the reason why.

[Phlegmatic]

I for one am glad chargebacks are allowed. It is an invaluable service for creditcard users that was put inplace to protect them from shadey merchants and creditcard fraud. It has helped me in the past after signing up to a website that promised everything and offered nothing. Before the money was returned the person charged me again for the same amount. I simply filled in another dispute form and got that money back as well.

[flyingiguana]

i agree that ppl should be allowed to chargeback. problem is ppl will chargeback even when they signed up. u know, wife see's credit card statement and wonders what that charge is from the porn site. think the husband is gonna say, 'ya i spank my monkey every night instead of screwing u?' not a chance, then bang, another chargeback.

[basschick]

Phlegmatic, 100% of my 18 chargebacks on a site i used to have all TOLD me that <br />a. they visited the site and enjoyed it<br />b. they just didn't want to pay<br /><br />so they claimed they didn't use their credit card and charged back.<br /><br />that is illegal. it is bullshit. banks should be a little more careful before allowing people to charge back. if a guy says he "lost his card" but hasn't reported it stolen, and then later "finds" it after making purchases, they should report his ass.

[alohaha]

yes.. I've had a handful of chargebacks, they were almost all "well I wanted it 3 weeks ago but I changed my mind today and decided I don't want to pay for it, so I'll charge it back"<br /><br />fortunately, 98% of customers are honest, but that 2% (or more, for you adult webmasters? curious..) .. that charges back without a good reason is bad.. we need protections, I think I'll do a version of that 'send a dvd', and use the membership as the extra, in terms of the offer.. a good approach..<br /><br />many of my service products are up to $1K in size, so I need protection against illegit ripoff chargebacks, for those few that think they can take advantage of me. I'll simply contact their local PD and file a criminal complaint for interstate cc fraud etc.<br /><br />good thread, this is a hot topic re "loss control" .. customers are hard enough to convert/get to your site, without dealing with lame ripoff folks. <br /><br />Other ideas? <br /><br />This is in the category of "how to prevent shoplifting" for the retail segment.. <img border="0" title="" alt="[Embarrassed]" src="redface.gif" />

[LiveDose]

The easy chargeback system won't stop because banks are making a killing with the fees. I think you would need some kind of banking legislation which probably won't pass either because politicians are all whores paid for by banks. The issue will be dealt with better at some point with better technology.<br /><br />I too agree though that it is an important right of the consumer which I have personally used dealing with shady hosting companies twice and 1 domain registrar. Unfortunately it can be greatly abused by some unethical people.<br /><br />Surf, you could probably file higher up the ladder as interstate commerce would constitute federal mail fraud. Not sure what kind of a response if any you would get.... Just my 2 pennies...<br /><br />LD <img border="0" title="" alt="[Big Grin]" src="biggrin.gif" />

[*Kimmykim*]

Couple things in this thread I wanted to comment on -<br /><br />1. Selling tangible goods -- most third party processors don't handle tangibles due to the fact that we can't verify that you actually shipped the merchandise. If you don't have a signature, from say Fedex or UPS, there is no more proof of delivery than there is with soft goods downloaded online or subscriptions. <br /><br />The next thing to worry about with sending out dvd's etc, is the fact that in some US states it's illegal to send in porn, way more illegal than someone joining a paysite from that state. <br /><br />2. Chargebacks. The current situation with chargebacks is ridiculous. Every time a consumer charges back there is a $15 administrative fee, regardless of any fines. Fighting a chargeback under the current system costs alot more than $15 by the time you pay someone to manually handle it, plus you really don't win without a signature, so you just end up wasting more money.<br /><br />Once cvv2 becomes mandatory, there will be some differences. We will then be able to automate the response process, and as we see if it we have a verified cvv2 coupled with correct card information and bank approval, there should be no chargeback issued. With any luck this won't be too far in the future.

[alohaha]

Alternatives..<br /><br />How about something like the ibill (?) or whatever, eg online sending a money order, which is not chargeback-able?<br /><br />Any other thoughts? Also, I'm curious re what percent of chargebacks you folks have had, in general, and anything you've learned from it?

[*Kimmykim*]

The only problem I see with payments that don't allow for immediate access is you lose two things. One being the desire to have the product, since porn is a completely impulsive purchase, and two, the ability to recur the billing...

[toker]

The answer is "Porn Cards" just like prepaid LD but surfers could buy them to gain access. I think thrid party billing companies should have already done this by now. <br /><br />You have people who cant pay with credit or check using dialers $3.99+ per min every day so what better way then to let them send a money order for a card good for a whole year on various sites. Each month the card could be used at any site in the system and deducted for the cost of a monthly membership or a trial period. <br /><br />This would mean only the company that issues this prepaid card could issue any type of refund. It would also be useful if a user joins and is totally unhappy with the whopping 200 images in a site that claims to have over 50k images. <br /><br />You would cut down on chargeback fees but allow a refund only if the service that was promised is not delevered. They could also better explain they bought a net card to the wifey which could be also tied into other services or internet shopping by the same billing companies.

[Phlegmatic]

Basschik said:<br />&gt;Phlegmatic, 100% of my 18 chargebacks on a site &gt;i used to have all TOLD me that <br />&gt;a. they visited the site and enjoyed it<br />&gt;b. they just didn't want to pay<br /><br />Fair enough. Why didnt you take some legal action against them or call the police/FBI?

[alohaha]

good approach toker.. if there's a company that will do this for a small percentage, that would be fine.. kind of overlaps with that "adultsite" type of thing tho, eg buy a membership and it's good for a bunch of (bs) 2page sites.. need to make it different-sounding... I like your idea.. worth working on..

[matuloo]

Toker : I agree with you in one thing - it wouldbe easier to explain the wife that he bought a "NET" card.<br /><br />But what I dont agree with is your comparison with dialers - I strongly believe that a huge majority of dialer users are not aware of the fact that they are going to get billed. And in the case of a porn card they would know it very well.

[Shianna]

</font><blockquote><font size="1" face="Verdana, Arial">quote:</font><hr /><font size="2" face="Verdana, Arial">Originally posted by toker:<br />[QB]The answer is "Porn Cards" just like prepaid LD but surfers could buy them to gain access. I think thrid party billing companies should have already done this by now. <br /><br />You have people who cant pay with credit or check using dialers $3.99+ per min every day so what better way then to let them send a money order for a card good for a whole year on various sites. Each month the card could be used at any site in the system and deducted for the cost of a monthly membership or a trial period. <br />QB]</font><hr /></blockquote><font size="2" face="Verdana, Arial">There is something like this it's called token systems. Just not enough webmasters use it yet. <br /><br />The surfer signs up by buying 100 tokens and gets an ID# then can spend those tokens in any/all of the token sites he want's. When he runs out of tokens he can get refills and always has the same ID#( not just for a year but forever) so he doesn't have to remember a ton of usernames and passwords for every site that he likes to visit. <br /><br />You can set it up so that they spend tokens for each individual gallery or a set amount of tokens for your entire members area. <br /><br />I have a few token sites and for a tgp size gallery I average about $.09 per gallery view - the surfer would have only paid 10-15 cents.<br /><br />can you imagine if tgp converted to this format how much $ we would all make? $.09 X 100,000 gallery views a day?<br /><br />Of couse the current token traffic isn't anywhere near that of tgp so I'll just have to sit here and keep dreaming.

[Shianna]

I also forgot to mention that there are Adult & non adult tokens so if the wifey see's a charge from "token systems" the guy could claim it was for online video games or other Non adult stuff. <img border="0" title="" alt="[Cool]" src="cool.gif" />

[Dcorp]

chargeback is really bad for them...

[Shianna]

</font><blockquote><font size="1" face="Verdana, Arial">quote:</font><hr /><font size="2" face="Verdana, Arial">Originally posted by Bora Diker:<br /><strong>chargeback is really bad for them...</strong></font><hr /></blockquote><font size="2" face="Verdana, Arial">You could be right. I have no idea what their charge back ratio is. <br /><br />I do know that in the time I've been using them I have never had a sale deducted from my account and never had to pay any chargeback fee's myself.<br /><br />There is a place where the surfer can go to get credit back for the tokens they spent at my site if it was crap or something was broken. But again I've never seen anything deducted from my account in nearly 2 years.

[basschick]

Phlegmatic, we have enough legal problems in this business as it is. i recommend that you contact them first - most of them sent me money.<br /><br />secondarily, use a collection agency!

[alohaha]

any other techniques to reduce chargebacks out there that you folks have found? I don't like the idea of just 'eating it', for the bs customers ..

[Terrance11]

</font><blockquote><font size="1" face="Verdana, Arial">quote:</font><hr /><font size="2" face="Verdana, Arial">Originally posted by Shianna:<br /><strong> </font><blockquote><font size="1" face="Verdana, Arial">quote:</font><hr /><font size="2" face="Verdana, Arial">Originally posted by toker:<br />[QB]The answer is "Porn Cards" just like prepaid LD but surfers could buy them to gain access. I think thrid party billing companies should have already done this by now. <br /><br />You have people who cant pay with credit or check using dialers $3.99+ per min every day so what better way then to let them send a money order for a card good for a whole year on various sites. Each month the card could be used at any site in the system and deducted for the cost of a monthly membership or a trial period. <br />QB]</font><hr /></blockquote><font size="2" face="Verdana, Arial">There is something like this it's called token systems. Just not enough webmasters use it yet. <br /><br />The surfer signs up by buying 100 tokens and gets an ID# then can spend those tokens in any/all of the token sites he want's. When he runs out of tokens he can get refills and always has the same ID#( not just for a year but forever) so he doesn't have to remember a ton of usernames and passwords for every site that he likes to visit. <br /><br />You can set it up so that they spend tokens for each individual gallery or a set amount of tokens for your entire members area. <br /><br />I have a few token sites and for a tgp size gallery I average about $.09 per gallery view - the surfer would have only paid 10-15 cents.<br /><br />can you imagine if tgp converted to this format how much $ we would all make? $.09 X 100,000 gallery views a day?<br /><br />Of couse the current token traffic isn't anywhere near that of tgp so I'll just have to sit here and keep dreaming.</strong></font><hr /></blockquote><font size="2" face="Verdana, Arial">there is prepaid pord cards. XXXwebhosting.com used sell them in wholesale batches.

[Terrance11]

</font><blockquote><font size="1" face="Verdana, Arial">quote:</font><hr /><font size="2" face="Verdana, Arial">Originally posted by surfcat:<br /><strong>any other techniques to reduce chargebacks out there that you folks have found? I don't like the idea of just 'eating it', for the bs customers ..</strong></font><hr /></blockquote><font size="2" face="Verdana, Arial">Send surfers to sites that offer 1 month memberships instead of 3 day trials. That's where most of the charge backs occur. Pay sites that offer good customer support, and a clear cut cancellation page as well. Sponsors like karups pc have close a very low chargeback ratio. Also, choose your credit card processors more carefully. Globill's cb ratios are about half that of most others, cause they have stricter acceptance policies, and require more info from the surfer.<br /><br />There's no way of just saying, I'm getting rid of chargebacks for good... <br /><br />by the way, I meant porn cards in the post above, not pord...