Internet Fraud

virtue · « **on:** 5 Oct 2010, 10:54 pm »

Doing business on the internet has its risks for vendors as well as customers. The greatest risk for us is that someone will order a very expensive system and then long after the system is delivered, there will be a "charge back" to us because the card was not actually authorized (ie. stolen). Incidence of fraud can be reduced using robust address checking but it's not foolproof.

This week we lost $4,000 due to fraud and are going to be implementing more strict address checking and requiring delivery signatures. If you are a member of this forum and have special delivery needs, we can accomodate them on a case-by-case basis. We're sorry should any of these counter-measures prove an inconvenience.

dvenardos · « **Reply #1 on:** 5 Oct 2010, 11:00 pm »

Ouch! (censored).
Sorry man.

Mariusz · « **Reply #2 on:** 5 Oct 2010, 11:03 pm »

Ouch X2
sorry to hear about this Seth.

Bill O'Connell · « **Reply #3 on:** 5 Oct 2010, 11:18 pm »

Seth,
Sorry to hear about your loss.

Can you send me a private email as a heads up for who to watch out for?

Thanks if possible.

Bill

Phil A · « **Reply #4 on:** 5 Oct 2010, 11:29 pm »

I look at my bill online at least a couple of times a month. A few years back there were bogus charges on one card. I caught it early and it wasn't much (perhaps $200-300) and did not get charged for it. I had to get a new credit card ASAP. I'm sure it there are regularly large items sold a business could easily contact the charge card company and verify the information. Sorry to hear about the loss.

XMAS shopping season one needs to be extra careful. Many stores still have wireless transmission of your cards in the store and someone with a laptop within a reasonable distance can get hold of it. It wasn't that long ago when a chain restaurant in my area had their customer credit cards accessed over the web from Russia. The story was reported on the news wires too. It's big business and unfortunately it is not victimless

Jed · « **Reply #5 on:** 5 Oct 2010, 11:48 pm »

Sorry to hear about the fraud. Was it an international transaction?

virtue · « **Reply #6 on:** 6 Oct 2010, 12:16 am »

We sent a pair of loaded ICEBlocks to Mexico City and a TWO.2 + Ascend 340 to Alabama.

It turns out that the highest security settings on our Volusion merchant account (through Skipjack) was NOT enabled by default. Can you believe it? I'm outraged. This has been an extremely expensive lesson.

I build relationships with every customer and one of the scammers even faked me out by email. Audiophiles normally send long responses to the question... what gear do you currently use

He did not... I should have known.

davidrs · « **Reply #7 on:** 6 Oct 2010, 12:21 am »

Really sorry to hear about the fraud. And thanks for sharing this. I think it is important for us consumers/buyers to know the risks on the business side. Plus we all share in the cost of fraud and other types of theft.

- David.

antonio · « **Reply #8 on:** 6 Oct 2010, 07:48 am »

regardless of the general condemnation of all forms of dishonesty,
i'm very sorry also because seth and virtue audio dont deserve it because they are very customer-oriented and care to our needs in a very special way.
antonio

dba · « **Reply #9 on:** 6 Oct 2010, 10:16 am »

I feel for you Seth.

A case i will impart on our community, not related to Virtue Audio but regarding fraudulent use of Credit Cards and a certain non-bank that acts like a bank...

Some years ago i sold items via Ebay and received payment via Paypal. Sale was made on the Wednesday, funds cleared on the Friday to Paypal. Customer collected goods on the Friday in person (v.important point). On Sunday i transferred half the funds to my private account, leaving the rest in there for, ya know, any purchases i could be tempted with.
The following Wednesday i was informed by Paypal that the purchaser used a fraudulent card and the payment was null and void, i would have to replace the half i'd transferred to my private account....

I couldn't believe it and sought advice. I also sought the support of the Police as instead of this being an internet crime (which carries no jurisdiction) as the customer collected in person the issue came under the authority of my local force. Thankfully i received a crime number.

This incident happened over 5 years ago, since then i have been unable to use Paypal and they have sold my debt to them on and on to differing Debt collection agencies, all of which i give the crime number too and they close the case.

I've requested that Paypal take me to court to clear this action as the customer performed the same trick to many people on Ebay, the police know his location but a cyber crime is one that doesn't really get attention unless its for many thousands of £'s. Paypal will not do this as they know it will casrry negative publicity and open the floodgates for many such victims as myself - neither have they initiated any public ownership of the debt which could force my credit worthiness to be in question, this i would happily take them to court myself and royally screw them.

My advice is it is very hard to filter the good from bad, and mostly the ethically get knocked down by the unethical - their sins catch up with them in some way but for those with clear ethics the lesson when being knocked down is in how to get back up and carry on

saisunil · « **Reply #10 on:** 6 Oct 2010, 02:56 pm »

Don't you have merchant protection from credit card fraud? Shouldn't the credit card issuer / bank bear the burdent of fraud ...

What benefit do you get from paying X% fees to crdit card company ...

Really Sorry to hear about that ...

avahifi · « **Reply #11 on:** 6 Oct 2010, 03:26 pm »

I accept credit cards only from the USA and Canada where address verification is available and then ship only to the billing address, insured, unless it is a customer I previously know.

Thanks for the heads up regarding Pay Pal. I was assuming their payment verification was as thorough as ours. You tell me it is not.

I too got burned years ago with a foreign order paid for by a stolen US credit card. Never again.

For foreign customers, I accept only wire transfers directly to my bank or Western Union wire transfers. So far this has kept us from taking a hit again.

Regards,

Frank Van Alstine

P.S. The really sad thing is that I am throwing away millions of dollars in sales to clients in Liberia.

gcos · « **Reply #12 on:** 6 Oct 2010, 04:42 pm »

Unfortunately this thread is taking on a bashing of international customers as if there is no cc fraud committed by US citizens. The fact is the cc companies are the real crooks! they charge absurdly high rates based on the high incidence of fraud and when the fraud occurs they don't cover you. So please direct your ire at the Big 3 and don't punish the 99.9% of us who are honest ! Thankfully I am not buying van Alstine and I am not from Liberia...

Mama Virtue · « **Reply #13 on:** 6 Oct 2010, 05:49 pm »

The bottom line here is due to this fraud Virtue charge and shipping policies will change and become more strict. More work for us, but that's ok, in scams like this not only do we get screwed but the person who rightfully owns the cc and who never received the merchandise they "paid for" also gets screwed. And the criminal gets away free!!! Will continue to investigate, am keeping my fingers crossed!

Cheerwino · « **Reply #14 on:** 6 Oct 2010, 10:28 pm »

Quote from: virtue on 6 Oct 2010, 12:16 am

We sent a pair of loaded ICEBlocks to Mexico City and a TWO.2 + Ascend 340 to Alabama.

It turns out that the highest security settings on our Volusion merchant account (through Skipjack) was NOT enabled by default. Can you believe it? I'm outraged. This has been an extremely expensive lesson.

I build relationships with every customer and one of the scammers even faked me out by email. Audiophiles normally send long responses to the question... what gear do you currently use He did not... I should have known.

Alabama, huh? You know, those of us down South have ways of takin' care of boys like that.

wsturner · « **Reply #15 on:** 7 Oct 2010, 03:37 am »

Quote from: Cheerwino on 6 Oct 2010, 10:28 pm

Alabama, huh? You know, those of us down South have ways of takin' care of boys like that.

yea...It's called a good ol' country ass whuppin!

Guy 13 · « **Reply #16 on:** 7 Oct 2010, 04:59 am »

Quote from: avahifi on 6 Oct 2010, 03:26 pm

I accept credit cards only from the USA and Canada where address verification is available and then ship only to the billing address, insured, unless it is a customer I previously know.

Thanks for the heads up regarding Pay Pal. I was assuming their payment verification was as thorough as ours. You tell me it is not.

I too got burned years ago with a foreign order paid for by a stolen US credit card. Never again.

For foreign customers, I accept only wire transfers directly to my bank or Western Union wire transfers. So far this has kept us from taking a hit again.

Regards,

Frank Van Alstine

P.S. The really sad thing is that I am throwing away millions of dollars in sales to clients in Liberia.

Hi.
I agree 100% with the above, however, I am a Canadian from Quebec living in Vietnam and I had a similar problem. I wanted to buy 150 USD worth of stuff from Parts Express, they would not accept my Master card debit card, because the address is in Vietnam issued by ACB (Asia Commercial Bank), they asked me for a wire transfer, the problem is that in this communist country, you cannot send money out of the country unless you sign some kind of contract between parties... Anyway, lots of red tape.
I will have to find another way to do it or just buy local cheap stuff.
Guy 13.

jtwrace · « **Reply #17 on:** 7 Oct 2010, 11:45 am »

Quote from: Guy 13 on 7 Oct 2010, 04:59 am

Hi.
I agree 100% with the above, however, I am a Canadian from Quebec living in Vietnam and I had a similar problem. I wanted to buy 150 USD worth of stuff from Parts Express, they would not accept my Master card debit card, because the address is in Vietnam issued by ACB (Asia Commercial Bank), they asked me for a wire transfer, the problem is that in this communist country, you cannot send money out of the country unless you sign some kind of contract between parties... Anyway, lots of red tape.
I will have to find another way to do it or just buy local cheap stuff.
Guy 13.

Guy

Just very curious to know why you choose to live there.

Guy 13 · « **Reply #18 on:** 7 Oct 2010, 11:57 am »

Quote from: jtwrace on 7 Oct 2010, 11:45 am

Guy

Just very curious to know why you choose to live there.

Hi jtwrace.
(Not sure how I should call you ?)
Two reasons why 15 years ago I choose Vietnam.
My Vietnamese wife and business opportunities.

Not that Canada (Montreal, Quebec) is not a nice country, but I wanted a big change in my life and believe me, coming to Vietnam, was a BIG change, almost more that expected, but no regrets... I gain very different experience that I would not have gained in Canada.
I must say that I am now (62 years old) seriously thinking about going back to Canada to retire after a long working life filled with lots of experiences.
I hope I have answer your question, if not, try again.
Guy 13

gcos · « **Reply #19 on:** 7 Oct 2010, 12:38 pm »

This is my last comment on this issue and I am only making it to hopefully assist Seth in coping with a problem which is very common in business. I am a retired CEO of a billion dollarl oil company and I am making the point, after 40 yrs experience in business, that business is not about avoiding risk but managing it. All businesses have risks and you have to have a risk management system. The 'chastity belt' approach, as suggested by van Alstine, to business is limiting and will eventually stunt your growth. The IRS allows you to establish a provision for bad and doubtful debts, which is what you have now. There are international benchmarks for a reasonable provision for all kinds of risks. There are dishonest people in all countries and once you are in business you will have to take account of that. Provide for the losses which may arise from time to time and provide for it as it is a legitimate business expense. Van Alstine offers his suggestion. My response is that that approach is not a progressive one because as he says he may be losing millions in sales for a loss which may be 50 grand ! Virtue's track record in customer orientation is first class, as evidenced by your call to me in a far off country when I had a concern..that blew me away and your prompt solution to the problem. To ask international customers to wire transfer money to a bank account of someone they do not know from Adam is very inward looking and not customer friendly and I for one will never do that.
The feeling that the problem is with us foreigners is annoying when in your first post you mentioned that one was local and one was foreign (if Mexico is ..lol)
So in closing, Seth, what you have experienced is par for the course in running a business . Provide for it and spread the cost.
btw..I am writing this post to my 901 making sweet noises in the background ! I had a listening session with some audiophile friends on the weekend..they were simply blown away. So expect some orders from T&T and I hope they do not have to wire transfer funds.