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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?

    SMTPBOXES, May 29, 2018 IP
  2. Elevate

    Elevate Peon

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    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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    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 Notable Member

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    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