Let’s begin by stating the obvious – FRAUD STINKS.
Fraud costs so many people time and money. Frustration. Headaches. Hassles.
Here is what has happened… I received a Chargeback Notification from Visa International, complete with a signed affidavit from someone in arabic speaking country saying that charges that went through my system were fradulent.
I went in and looked at the charges and noticed that no, the name on the order (an Eric from the UK) did not in fact, match the name on the affidavit (Pattana). Great…
So I called the number to try and learn more about what had happened and how I could avoid this in the future. I was told that unless I use a “Verified by Visa” system for international charges, I was pretty much sunk in situations like this. There is no address matching safety system for cards outside of the US. Great…
Then I decided to dig a little deeper. I did have a new affiliate who, in less than 2 weeks, had earned (and been paid!) over $130… this affiliate was from Thailand. Looking at the activity, I saw some trends. This “affiliate” (I’m using the term loosely and sarcastically at this point) has done an amazing job – better than any other affiliate in a short amount of time. 9 referrals in 2.5 weeks – wow! So how does an affiliate, claiming to use Google Adwords, get such results – from alleged customers in Australia and the UK?
One word: Fraud.
Add a few more words: Stolen Credit Cards.
Shall we add a few more: Very frustrated artist writing this blog post.
So what to do now…
At this point, I’m out the affiliate commissions I’ve already paid this scammer. I will also be out some fees from the credit card companies for accepting and having to refund the charges as others realize that fraudulent charges were made.
I will call and see if there is a way to be proactive and simply refund the other victims before they have to go through the hassle of a dispute. I’ve had to do it before and it isn’t fun.
It goes without saying that this affiliate has been removed and will receive no more money from me. I’m thankful that Pattana was quick to dispute or it could have gone on much longer with more money lost for me.
I have blocked all the IP addresses that were used to make the fraudulent charges.
I will be looking at how to protect my business from similar issues going forward. This may include changes to how credit cards are processed for international customers.
I will also be considering changing how I pay out to affiliates – perhaps waiting a month before paying commissions to ensure that the charges go through appropriately before paying out money. (If you are an affiliate – I’ll keep you posted if I make any changes.)
I called my credit card processor and told them I believed 8 other stolen credit cards were used. They recommended I refund the money so that I don’t end up with 9 chargebacks on my account – I will pay less in fees to proactively refund the money and won’t risk having my credit card processing suspended.
Now I’m waiting to learn more about the “Verified by VISA” and equivalent Mastercard program to verify international credit card orders so I don’t have this issue again. My guess is this has cost me almost $500 – not terrible compared to what many businesses face and the fact that I caught it so quickly but still! That makes a difference in my business, as you can imagine.
I hope that this lesson I’m learning can help others avoid the lesson altogether in their business. If you have an affiliate program, watch who is signing up and watch for unusual activity as far as referrals. (All of this person’s referrals were from outside the US, they all had hotmail.com email addresses and I’m guessing – all used stolen credit cards)
Also, watch your own credit card activity and report fraudulent activity right away. It could help vendors like me as well as yourself.
I won’t let this very rotten apple spoil the bunch. Most of my affiliates are amazing and I love more than anything, paying them every month for their help in spreading the word. Thank you if you are one of them – know how much I appreciate you!
– Tara Reed
P.S. It goes without saying to use your own money or credit cards when buying anything, right? 😉
P.P.S. If you want in on earning by helping promote the products available through the Art Licensing Info family of websites, go to http://artlicensinginfo.com/affiliate-info.html for more details.