Comments on: Chargeback Fraud – Customer Caught Red Handed (Finally!)

By: Adam McFarland

Adam McFarland — Thu, 13 Oct 2011 19:44:35 +0000

Rich – thanks for posting that. I agree: sigh. I’d like to believe that something like BadCustomer could be done legitimately, maybe by the government or as an open source project, but who knows.

By: Rich Ghost Wolf

Rich Ghost Wolf — Thu, 13 Oct 2011 18:27:34 +0000

And, perhaps unsurprisingly…badcustomer.com itself turns out to be…a giant credit card scam.
http://www.creditcards.com/credit-card-news/bad-customer-i-works-scam-enforcer-busted-ftc-1282.php

Makes me really wonder if I can trust anyone these days (sigh).

By: Rob

Rob — Wed, 20 Oct 2010 19:14:57 +0000

No idea. Suppose you’d call your merchant account provider and ask them about 3D-Secure (umbrella term) or Mastercard securecode / Verified by Visa (brand names).

Please do let us know how you get on!

By: r-merchant

r-merchant — Tue, 19 Oct 2010 17:50:13 +0000

This is very promising. If one already has the merchant account, what is the quickest way to get setup with this program?

By: Adam McFarland

Adam McFarland — Tue, 19 Oct 2010 17:43:47 +0000

Yes, I’m surprised it’s not integrated better with the shopping carts themselves.

By: Rob

Rob — Tue, 19 Oct 2010 17:36:04 +0000

Yeah fingers crossed! I see no reason it shouldn’t be adopted there. I was pretty surprised when you hadn’t heard of it, given that both backers are American companies! Maybe they’re testing it on us Guinea pigs first?

Tis stupid that its on a different domain/frame and asks for your full password rather than just a few characters though. That’s totally against everything we’re taught as web consumers.

By: Adam McFarland

Adam McFarland — Tue, 19 Oct 2010 17:21:06 +0000

Great video Rob. Thanks for sharing. It’s very interesting how the bank refused to refund a purchase that was “verified by Visa”. Like you said, for legit merchants this seems like a great thing. I wonder if this will ever be adopted more commonly in the US? Seems like it could cut down on fraudulent claims by quite a bit. Customers would be less likely to threaten “chargeback blackmail” if they knew the transaction was “verified” and they had almost no chance of getting the charge reversed…as compared to now when it seems you can basically have any charge reversed with a quick phone call.

By: Rob

Rob — Tue, 19 Oct 2010 09:51:33 +0000

A little more on this – http://www.bbc.co.uk/news/uk-11571766

Shows it can be worrying for the user as the security is on in a new frame/page, and of course there’s always opportunities for scam artists to replicate pages. However, about 2 minutes in you’ll notice them saying that Visa flat out would not process a refund for her. For legitimate merchants this is great.

By: Adam McFarland

Adam McFarland — Sun, 10 Oct 2010 17:22:04 +0000

Thanks for all of the info Dave & Rob. I find it interesting that banks are now trying to alleviate themselves of the liability. I think part of the reason we have a chargeback problem is that banks have made it so easy to do so (and advertised as much)…if they make it harder, as they should, I *think* it will have a positive impact on merchants.

By: Rob

Rob — Sun, 10 Oct 2010 17:01:56 +0000

Ah, didn’t realise that. What with Mastercard and Visa being the driving force and them being American companies I’d expect that it is there/is coming there. We’ve had it about 2 years.

From a customer standpoint, the first time you use it you have to set up an account with visa/mastercard. It asks you for your DOB, various account numbers etc. and gets you to set up a challenge code and response. When you come to use it, you begin the checkout process as normal from a merchant, then in the last stage you’re redirected to a verified by visa site (either a redirect or an iframe) and you see your own challenge code (to prove it’s legit) and give it your password. Then it sends you back to the merchant and confirms the sale.

From what I can find out from reading, the merchant doesn’t face any risk of chargeback, presumably because the customer entered their password. The customer is also absolved of fraud risk through phishing.

As for the actual implementation, I think paypal payments pro/payflow can integrate 3D-secure. The set up is a bit messy from the customer perspective (having to enter your DOB the first time, having to enter your WHOLE password when asked… it’s completely against all the security advice we’re given as consumers), however, it’s become a trusted and known brand and people on the whole seem to get on with it. Only problem for me is that I’m always forgetting my password, getting it wrong 3 times, then having to reset it… it won’t let you use the same password as before either, so it’s a continuing problem (for me at least!). Doesn’t put me or anyone I know off purchasing though – I feel better using it than not, because of the feeling of added security.

Dunno if I mentioned before, but lots of banks here are now giving away security software and anti-phishing software free. HSBC’s “rapport” software seems quite good. Reading the smallprint of my account, if I’m a victim of fraud and I’ve made purchases online without anti-spyware etc. and without mastercard securecode/verified by visa, I may be liable for the loss.