One Way To Avoid Being Scammed While Selling Online

When selling goods online it’s vital to be aware of certain risks, especially if the goods you are selling are high-value ones and therefore a high-risk venture when it comes to sending them off potentially to someone you’ve never met before.

One thing to  be aware of is that if you’re planning to take payments through a merchant service provider, credit card company or PayPal, as a seller you are at significantly heightened state of risk when it comes to scams and exposure to  fraudulent buyers.  The problem many users of PayPal and other services continually come up against is that the buyer always seems to win in any kind of dispute or claim.  

Why is this the case with credit card companies?  One reason is that it’s in their interest to keep the card-holding customer on side – they want to keep them transacting.  Why is this the case with PayPal?  Less clear, but what is clear is that if you’re selling goods online and sending them off, you need to be massively careful about what payment methods you choose to accept, as well as which deals to go ahead with and which deals should raise a red flag and ultimately be abandoned.

Here’s an example of a fraudulent deal that should have been avoided, something that actually happened to a friend of mine some time ago.  The scam also illustrates the fact that the seller can be completely honest, do everything right generally speaking; but one fraudulent buyer and one mistake can cost your online business seriously!

So the order comes in for some goods valued at around 2000 dollars.  The buyer makes the order over the phone stating their name and saying they intend to buy the goods using a credit card registered in a different name.  The reason given could be that they are buying the goods for their boss, buying them for a friend who is away for a week, anything.  So the name of the person ordering is different from the name on the billing address – there’s the first thing that should raise alarm bells.  Next, it turns out the buyer’s delivery address doesn’t even match the billing address, let alone the name of the person making the order.

So you receive the payment by credit card and send the goods.  Having had the goods delivered, you retain the evidence of shipping and receipt of delivery by the buyer (the goods were accepted and signed for at the third party address given in the order).  So you’ve got the evidence that you shipped the items, if the buyer was using a stolen credit card or fraudulently charges back the sale, surely nothing could go wrong?  You’d enter your plea with the credit card company/PayPal or whatever merchant service you’re using and say you delivered the goods, why should you have to pay if the buyer fraudulently charges back – surely you’re in the clear.

Except that the credit card company is not going to help you with this, and PayPal is not going to take your side.

In this case alarms bells should obviously have started to ring as soon as the customer gave a different billing name and a different delivery address.  There’s no use in having the evidence of delivery – you’re records are not sufficient for you to fight this case effectively.

Beware of card not present transactions.  If taking an order that will be paid by credit card, as a precaution always make sure that the card holder’s name and address on the billing address are the same as the delivery address, so that proof of delivery corresponds with the cardholder’s name and address, and issues relating to stolen credit cards will be flagged up earlier.  If the details don’t match, suggest a wire transfer.

Again, be aware that credit card holders, merchant account providers, PayPal: all will tend to take the side of the buyer in the case of a chargeback or stolen credit card dispute.  The seller can be honest and do virtually everything right; they don’t care: you still end up robbed of both money and goods.