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How to reduce PayPal fraud payments?

Discussion in 'Payment Processing' started by SMTPBOXES, May 29, 2018.

  1. #1
    Hello everybody.
    In short we get payments from stolen debit/credit cards for purchasing our online services. When the card holder understands what is going on PayPal puts the money on hold and we don't have any chance.
    Started to refund the payments and even after refund (which even does 5% loss) we sometimes get chargeback fees of $20!
    Can somebody give some ideas to prevent this. The ratio of real/fraud payments is like 50/50 which reduces our profits a lot...
    Any ideas?

    Thanks
     
    SMTPBOXES, May 29, 2018 IP
  2. Elevate

    Elevate Greenhorn

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    #2
    Are you using software where you can add a fraud protection plan such as Fraud Labs Pro or MaxMind?
     
    Elevate, Sep 14, 2018 IP
  3. DVOnline

    DVOnline Member

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    #3
    There is an impractical solution for that. You must increase your service price in order to cover yourself from customer fraud and charge-back scams from identity theft. I know, I know, you'll say that the current market is very competitive and increasing the price will drive away the customers. I wish there was a way to attract new customers based on the trust rank, but it's obvious that the majority will always go for the lowest price.

    In the future, when cryptocurrency is mainstream, the payment goes only one way and the trust rank is the only thing that attracts customers.
     
    DVOnline, Sep 14, 2018 IP
  4. mmerlinn

    mmerlinn Prominent Member

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    #4
    The ONLY SURE way not to get chargebacks is to NOT use PP nor CC. I know, that is not really feasible, but it is the only sure way.

    Other than that you can do a few things to lessen the exposure.

    First, as noted above, increase your prices enough to cover your costs plus have money for yourself. Yes, you WILL lose sales, but even with fewer sales, you should still make more than you do now. Trying to have the lowest price leaves you NO WIGGLE ROOM when the thieves visit you.

    Second, jettison ALL of your low profit items. Focus only in your high profit centers. Even if the 50/50 ratio does not improve, you will make more money with fewer sales and less cost.

    Third, find new products to sell, but ONLY HIGH PROFIT products. And price them so that you price cheapskates, thieves, etc out of your market. Your chargeback ratio should drop on these items.

    I don't sell online, I don't take PP, and I don't take CC. However, I have a reputation of having the highest prices in my industry. I literally price people with no money out of my market. I take personal checks and in the 11 years I have used this business model NOT ONE OF THOSE CHECKS HAS BEEN BAD. In other words, I price the thieves, cheapskates, etc out of my market leaving me ONLY with people that do not steal from me. Yes, sooner or later I will get burnt, but not even close to how you are being burnt.
     
    mmerlinn, Sep 14, 2018 IP
  5. tgotchi

    tgotchi Active Member

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    #5
    There is no way to prevent all frauds or chargeback. However, you can protect your business and reduce chargeback by engaging 3rd party fraud screening services.

    For example, FraudLabs Pro has a fixed cost model based on number of transactions. Signifyd is charging 1%-2% of sales for chargeback insurance. Both are very popular products in the industry.
     
    tgotchi, Nov 28, 2018 IP
  6. DVOnline

    DVOnline Member

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    DVOnline, Dec 1, 2018 IP
  7. CenTex Hosting

    CenTex Hosting Member

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    #7
    not sure what you charge for your service but you could look into doing bitcoin payments or wires. other option is verify credit card orders. Pick up the phone and call them. If the number is bad cancel and refund.
     
    CenTex Hosting, Dec 2, 2018 IP
  8. AlphaNine_Vini

    AlphaNine_Vini Active Member

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    #8
    Maxmind is a good source to protect your transactions and get rid of fraud payments. You must be getting those orders from a specific region. Don't take orders from that specific region. Make sure the IP is not a VPN and proxy , in case they purchase from an IP of hosting provider or a VPN or a proxy service provider.
     
    AlphaNine_Vini, Dec 4, 2018 IP
  9. CCProcessor

    CCProcessor Greenhorn

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    #9
    I am a rep for one of the top 10 processors in the USA. We work with The gateway Cardknox which is the fastest gateway and once you have EMV(the chip) protection it basically eliminates the chargeback issues. I would love to give you a quote for your rates- ashermurray1-Gmail dot
     
    CCProcessor, Dec 6, 2018 IP
  10. AlexanderA1227

    AlexanderA1227 Peon

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    #10
    I agree, you have to have verified credit card payment, even if you have any other protecting, just as a double layer.
     
    AlexanderA1227, Jul 15, 2019 IP
  11. QiSoftware

    QiSoftware Well-Known Member

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    #11
    QiSoftware, Sep 14, 2020 IP
  12. SMTPBOXES

    SMTPBOXES Greenhorn

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    #12
    Thanks for the answer. It is really interesting source of information. We ended up with different solution. We first approve members manually and then allow the paypal payment option. This works although it surely makes us lose some potential customers.
     
    SMTPBOXES, Sep 25, 2020 IP
  13. lizzieswellness

    lizzieswellness Greenhorn

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    #13
    Thank you so much this helps a lot.
     
    lizzieswellness, Jun 3, 2022 IP