Stripe Scam

Fredrick

Some advice needed please. Hope this is the correct section to post.

A few months back somebody purchased a laptop from my adverts store and paid me through Stripe, everything seemed legit.

Shipped the item registered signed for to an address in Co Dublin.
Few weeks on I get an email from Stripe about a dispute on this transaction for near €500.

The customer said he never authorised the transaction.
That I need to fill out an online form and produce evidence of the sale, postage and delivery a signature, which I did. They said it would take some time to investigate and we will come back with a decision, they also froze the funds until then.

I also sent them a screenshot of a PM from the person asking about a tracking number.

I logged on yesterday to check the status of this mess and a very short message told me you lost the dispute that the card issuer’s bank has made the final decision on this and that’s that, there is nothing you can do.

No explanation why I am now out over €400. It was clearly a scam but why do I have to take the hit on this and without a proper explanation as I produced the proof needed.

What’s the point of tracked signed for shipping?

Anybody else experience this? Do you think I can take this further?

Thanks in advance...

_Brian

Contact them and ask for a breakdown on the reasoning they used in the decision.

Dazza

We've been subjected to this aswell, when a customer files an unauthorised transaction you will rarely. if ever win. It's the customers bank that makes the decision, not Stripe . I've looked at going down the route of sending a collections agency or a letter to the address but it's very hard to find good info on this and whether there are any negative consequences.

This is a really good article I read on this and how stripe reacted.
http://www.buzzfeed.com/josephbernstein/steal-a-credit-card-buy-a-hoverboard#.ujY1zr6qP

Will you check if the card originated from Ireland or was the card from another country?

Mick Murdock

My girlfriend had a similar problem but for a lower amount - €170. It turned out that it was indeed a fraudulent transaction. Item was delivered to a Balbriggan address but the card was in fact stolen.

Fredrick

Dazza wrote: »

Will you check if the card originated from Ireland or was the card from another country?

Thanks for the reply, card origin is Ireland?

Fr_Dougal

Dazza wrote: »

We've been subjected to this aswell, when a customer files an unauthorised transaction you will rarely. if ever win. It's the customers bank that makes the decision, not Stripe . I've looked at going down the route of sending a collections agency or a letter to the address but it's very hard to find good info on this and whether there are any negative consequences.

This is a really good article I read on this and how stripe reacted.
http://www.buzzfeed.com/josephbernstein/steal-a-credit-card-buy-a-hoverboard#.ujY1zr6qP

Will you check if the card originated from Ireland or was the card from another country?

With PayPal you have seller protection if you have the delivery registered. They cover the costs.

goz83

the banks will side with the customer in a disputed transaction, even when you tick all the boxes, when it comes to customer not present transactions. On top of losing the funds paid, a kick in the nut sack is the fee often charged for the disput being dealt with.

Fredrick

goz83 wrote: »

the banks will side with the customer in a disputed transaction, even when you tick all the boxes, when it comes to customer not present transactions. On top of losing the funds paid, a kick in the nut sack is the fee often charged for the disput being dealt with.

Yes looks like I was charged a fee for the dispute on top of everything else, also contacted Stripe looking for more information and they said it's out of their hands that the bank makes final decision.

Online sellers seriously be aware of this before you decide to use Stripe!

goz83

Fredrick wrote: »

Yes looks like I was charged a fee for the dispute on top of everything else, also contacted Stripe looking for more information and they said it's out of their hands that the bank makes final decision.

Online sellers seriously be aware of this before you decide to use Stripe!

Its not just stripe though. I use elavon POS machine. The booking method and record keeping is water tight. Terms and conditions are plastered everywhere and spoken of at every opportunity. Even so, if i rightfully charge some ignorant muppet for not showing up and wasting 90 minutes of my time, I run the risk of losing the fee charged, while being charged a €15 fee for the reverse charge and I have to pay overheads during that lost time.

Then, if I decide to dispute the charge back, i have to put time into writing up a report and gathering the proof that the customer authorised the payment when making a booking and agreeing to the terms, I will certainly win the case, but I run the risk of a second charge back and another €15 fee and if that happens, the bank makes the final call and will always side with the customer unless they physically entered their pin number on the POS.

The only chance of recovering anything is by taking the customer to court. Ridiculous situation.

davidom2513

Sorry to open an old thread. But I'm considering using stripe for receiving payments on my website.

But this thread has made me very worried. How can it be so easy for someone to commit fraud like that?

It seems like the easiest option for banks is to do a chargeback on the card and its the sellers that are out of pocket in the end. Shouldn't the banks be insured against something like this?

Or do retailers get insurance against something like this?

davidom2513

Also shouldn't the garda be paying a visit to the address where the item was delivered?

I just can't fathom how someone can get away with it so easily and that a seller is just f***ed over like that

If someone has reasonings or assurances I'd love to hear them

davindub

davidom2513 wrote: »

Sorry to open an old thread. But I'm considering using stripe for receiving payments on my website.

But this thread has made me very worried. How can it be so easy for someone to commit fraud like that?

It seems like the easiest option for banks is to do a chargeback on the card and its the sellers that are out of pocket in the end. Shouldn't the banks be insured against something like this?

Or do retailers get insurance against something like this?

They may well be but the merchant always assumes the risk of fraudulent transactions. Unfortunately they guards do not follow up on the delivery addresses.

I don't know if you can put it in your terms and conditions that a passport or driving license is required for delivery. I'm not sure if any of the delivery companies will play ball though but its the way things are going.......

Walter2016

When selling with "Cardholder Not Present" transactions the seller is 100% responsible for teh transaction unless they us mastercard secure or verified with visa.

Stripe is a go-between service, but is more open to fraud than Paypal. Likewise accepting card payments online have the same risks. Online retailers use various ways of checking and flagging suspicious cards including geolocation of card issuing bank, and order placement and address verification.

Whilst stripe may be "fashionable" and a little cheaper than paypal, its no where near as secure for part-time sellers.

daigo75

davidom2513 wrote: »

Sorry to open an old thread. But I'm considering using stripe for receiving payments on my website.

But this thread has made me very worried. How can it be so easy for someone to commit fraud like that?

It seems like the easiest option for banks is to do a chargeback on the card and its the sellers that are out of pocket in the end. Shouldn't the banks be insured against something like this?

Or do retailers get insurance against something like this?

I'm not aware about insurance for merchants, and I would not be surprised if there weren't any, as the risk is quite high.

Having been "hit" by frauds a couple of times, it looks to me that the fraud check process is flawed, and that banks have all the reasons to side with the buyer. From what I've seen, if the same buyer keeps filing fraudulent chargebacks, there are no consequences for him, ever. Buyer gets the money back, merchant pays the back for the "favour" of the refund.

An atypical example of chargeback "adventure"
One specific case brings attention to how messed up the system can be. A customer bought one of my products, then filed a chargeback about a month later. I contacted him promptly, as I offer a money back guarantee and it would be cheaper for me to refund the purchase, rather than pay the chargeback fees and be "flagged" as a fraudulent seller (which is what can happen when a chargeback is filed).
The customer said that he made a mistake, and that he would withdraw the chargeback immediately, as he wanted to keep the product. The bank told him that they could not do that, and that I would have to request the cancellation (yes, it makes no sense). I filed the request, and they replied to me that only the cardholder can cancel the chargeback. Back to square one.

The customer requested the cancellation, and the bank requested a written and signed request. We provided it, signed, scanner and sent by post, all within three days from the chargeback request. Customer's letter was official, with all the transaction details, and the explicit declaration that the chargeback was a mistake, and he wanted to withdraw it.
We had to wait about 60 days to hear from the bank (that's the period granted to appeal, provide evidence for the transaction, etc). Final result: "chargeback was legitimate, transaction was fraudulent. You submitted the evidence too late, after we had made our decision".

This started a sh.tstorm, with my customer going against the bank to get the transaction paid again, and the fees refunded. The bank contacted me to apologise for the mistake, and asked me how much the amount would be (less than 100 EUR, fortunately), so that they could proceed with the refund. After I sent them the information they requested, they replied that the chargeback was legitimate, that there was no mistake from their side and that I was owed nothing. A complete farce.

Few weeks forward, a very angry customer appealed to the local Ombudsman, who fined the bank for negligence. At the end, both the customer and I received a compensation higher than the original transaction amount, which barely covered the time wasted looking after the issue, but that's an exceptional case. In my experience, usually the merchant doesn't see a penny.

davidom2513

Walter2016 wrote: »

When selling with "Cardholder Not Present" transactions the seller is 100% responsible for teh transaction unless they us mastercard secure or verified with visa.

Stripe is a go-between service, but is more open to fraud than Paypal. Likewise accepting card payments online have the same risks. Online retailers use various ways of checking and flagging suspicious cards including geolocation of card issuing bank, and order placement and address verification.

Whilst stripe may be "fashionable" and a little cheaper than paypal, its no where near as secure for part-time sellers.

It seems Stripe now has 3D secure paments in Beta for Visa and Mastercard:

https://support.stripe.com/questions/does-stripe-support-3d-secure-verified-by-visa-mastercard-securecode

If 3D secure is used and an unauthorized transaction is then filed by the buyer, I assume the bank is held accountable and not the merchant?

davidom2513

daigo75 wrote: »

I'm not aware about insurance for merchants, and I would not be surprised if there weren't any, as the risk is quite high.

Having been "hit" by frauds a couple of times, it looks to me that the fraud check process is flawed, and that banks have all the reasons to side with the buyer. From what I've seen, if the same buyer keeps filing fraudulent chargebacks, there are no consequences for him, ever. Buyer gets the money back, merchant pays the back for the "favour" of the refund.

An atypical example of chargeback "adventure"
One specific case brings attention to how messed up the system can be. A customer bought one of my products, then filed a chargeback about a month later. I contacted him promptly, as I offer a money back guarantee and it would be cheaper for me to refund the purchase, rather than pay the chargeback fees and be "flagged" as a fraudulent seller (which is what can happen when a chargeback is filed).
The customer said that he made a mistake, and that he would withdraw the chargeback immediately, as he wanted to keep the product. The bank told him that they could not do that, and that I would have to request the cancellation (yes, it makes no sense). I filed the request, and they replied to me that only the cardholder can cancel the chargeback. Back to square one.

The customer requested the cancellation, and the bank requested a written and signed request. We provided it, signed, scanner and sent by post, all within three days from the chargeback request. Customer's letter was official, with all the transaction details, and the explicit declaration that the chargeback was a mistake, and he wanted to withdraw it.
We had to wait about 60 days to hear from the bank (that's the period granted to appeal, provide evidence for the transaction, etc). Final result: "chargeback was legitimate, transaction was fraudulent. You submitted the evidence too late, after we had made our decision".

This started a sh.tstorm, with my customer going against the bank to get the transaction paid again, and the fees refunded. The bank contacted me to apologise for the mistake, and asked me how much the amount would be (less than 100 EUR, fortunately), so that they could proceed with the refund. After I sent them the information they requested, they replied that the chargeback was legitimate, that there was no mistake from their side and that I was owed nothing. A complete farce.

Few weeks forward, a very angry customer appealed to the local Ombudsman, who fined the bank for negligence. At the end, both the customer and I received a compensation higher than the original transaction amount, which barely covered the time wasted looking after the issue, but that's an exceptional case. In my experience, usually the merchant doesn't see a penny.

Seems like a very flawed system indeed.

What I don't understand is, surely if the buyer fills in the same billing address as the delivery address, then signs for the item on delivery, the bank would side with the seller and realize that this is not an unauthorized transaction.

If it is shipped to a different delivery address other than the billing address, then contact can be made with the buyer to determine that they are who they say they are, before shipping the item. Getting them to send a copy of ID or something. It'd be hassle for customers but it would help reduce fraud.

However, I will be sure to use 3D secure personally if I use Stripe in future I think

daigo75

davidom2513 wrote: »

Seems like a very flawed system indeed.

What I don't understand is, surely if the buyer fills in the same billing address as the delivery address, then signs for the item on delivery, the bank would side with the seller and realize that this is not an unauthorized transaction.

My speculation, based exclusively on personal experience and opinion, is that it's cheaper for them to just side with the buyer. The buyer is their client, the merchant is not. Acknowledging chargebacks means getting extra money from the merchant, with no effort (see my long story. They didn't "make a decision" or review anything, they just pressed the "acknowledge" button). Running an investigation might involve the risk of losing a credit card user, which is something they definitely would not want.

The fact that merchants get charged a "fine" with every chargeback request (even declined ones) is another sign of a flawed system. Besides, I was told that every chargeback is like a "stain" on a merchant's reputation, and that, if the number of chargebacks goes over a certain percentage of the total number of transactions, the merchant could be "blacklisted" (regardless of chargebacks outcome or their amount).

Most of the merchants I know simply factor in the risk of chargebacks and adjust their prices accordingly. Unfortunately, this means that the cost is spread over all transactions, and that honest buyers pay for the behaviour of the bad ones, but merchants don't have many alternatives.

Using 3D Secure can help, although I would not be surprised that the liability shift is always honoured by the bank. The drawback of such system is that it slows down the purchase process, and could lead to a cart abandonment. All customers have to go through a more cumbersome process due to few "rotten apples".

syntheticjunk

Even 3D Secure not so secure. My personal BOI 3D password is blocked, but most of the time transactions go through.

davidom2513

What would be the best course of action if there was a chargeback and it was obvious that it was not an unauthorized transaction?

For example a situation where an item was delivered to the same address as the billing address and then signed for by the buyer?

Small claims court?

Trojan

Allow for fraud in your margins and try not to worry too much about it.

I heard a presentation from a Realex representative [at the TOVS launch in Dublin Castle a couple of years ago] where he said their stats show that Verified by Visa costs vendors 40% of sales. In most industries that's a whole lot more serious than fraudulent transactions.