How To Battle Fraud

Fraud is a major problem online. With many countries unable to combat fraud the citizens are often free to run online scams with little possibility of being punished. The biggest problem comes from Nigeria and has been going on long before the Internet existed. But now with access to millions of people, scammers will try everything to make money.

The FTC provides many resources to help understand your rights and reporting scams. But the chance of getting your money back are pretty slim. So the best defense is not getting taken in the first place.

The rule of thumb is not to sell anything outside the USA. Since you don't understand export and international laws, you can get yourself into bigger trouble than just losing money. You have no recourse against foreign buyers and they are almost always scammers. So keep your sales local.

The same is true for buying goods. If the price seems to good to be true, then it is! Don't try to beat the rest of us buy buying below cost from some foreign country. Your own desire is the scammers key to taking your money.

One of the biggest threats is scammers that have stolen someones identity or Paypal account information. They pay using fake or stolen cards and the merchant thinks they made a big sale. But in reality he merchant has just taken a big hit.

If you are a small merchant you can call the buyer and verify the sale. This makes the buyer feel better and you know the phone number at least is correct and can verify they made the sale.

But in high volume low ticket items businesses, that is not possible. It is pretty widely accepted that you will encounter some fraud that you will end up liable for. So you should plan that into your pricing. Add 3-5% just for lost online sales and the incurred charges resulting from administration and fees when a sale goes bad.

But, just sitting back and taking it is not acceptable to most people. In those cases there are other services that can help filter fraud. However, they are mostly speculative.

At one time, much of the fraud came from people using free e-mail accounts, mostly hotmail.com. That was a clear way to filter some fraud, just don't accept mail from anyone that is not using their isp's mail account. But now more people use free mail for online access than isp pop accounts.

With the trends changing it is hard to pinpoint good from bad one day to the next. Even if you use a fraud control service, it will be expensive, likely filter out legit sales and still allow some fraudulent sales.

My personal experience has been that they tend to cost more sales than they save in fraud. Our best fraud control has been to manually review data, deal only with US customers and look for something that just is not right.

If someone refuses to give their phone number, don't do business with them. If a womans name is buying a new toolbox, question the order. Not than women wont buy traditionally male products, but there is nothing wrong with double checking.

If you want to avoid being taken, BE CAUTIOUS! Ask Questions and Watch Your Back.

As long as you are careful, you should not have any problems. If you act blindly, trust every customer and do business like you are handing out candy at Disneyland, you will loose big.

Just like in any business, common sense will go a long way.