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.
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