When Your Customers Steal

Credit cards and special programs protect consumers from fraud on the internet, but who’s protecting the businesses?

You know it’s a slow news day when the news programs on TV turn their
attention to their favorite new consumer warning. “Beware of online
businesses!” they cry. “YOU could be SCAMMED on the Internet!”

Every time I see one of these news stories, I groan, and wonder how
many sales my sites just lost. Then there are the ads for that new
credit card that “protects” consumers against online fraud. They make
Internet businesses people look like a bunch of thugs who meet in a
sewer all day long to torture innocent consumers.

There are a lot more honest, hardworking Netrepreneurs out there than
scam artists. That doesn’t make for a good news story, though, so we
all take the lumps for the transgressions of a sordid few.

You know what I’ve never seen, though? I’ve never seen a headline
story about the CUSTOMERS who scam the Netrepreneurs. I’ve seen
stories about thieves robbing convenience stores. I’ve seen exposes
featuring the practices favored by professional shoplifters. What
about the “consumers” who target online businesses when they steal?

I market both informational products and brand name merchandise on
the Internet. And I’ve been taken on both sides of the fence.

I publish a B2B (business to business) product called The Drop Ship
Source Directory. Recently, I received an email from someone who
bought my Directory on EBay, and had questions about how they were to
receive the information updates I send my customers every month.
There was only one problem.

I don’t SELL my Directory on EBay.

I was forced to write back to that person and tell him that he had
been scammed. It was obvious to me that someone had purchased my
product from me and was reselling it to others illegally. How this
scam artist expected to get away with reselling the product, I’ll
never know. It contains nearly a thousand pages. There is a copyright
notice on EVERY SINGLE PAGE. It’s like me buying Stephen King’s
latest book on Amazon, typing it up into electronic form, and then
reselling it on EBay. I’d have to be nuts to try something like that!

Last year, a site I was working with received an order for some
moderately expensive jewelry. Nothing out of the ordinary. The credit
card processed just fine, with the AVS (Automatic Verification
System) coming back “green”. This means that the online processing
system had checked the card’s information against the on-file address
and zip code of its owner, and everything was OK. The Ship-to address
was different from the card owner’s Bill-to address, but that’s
nothing out of the ordinary either. LOTS of people buy jewelry and
have it sent as a gift to another address.

A while later, we received a “chargeback” letter from the customer’s
bank. A chargeback means that the card owner has disputed the charge,
and we have to show cause why we should not refund the money. At
about the same time, we got a phone call from a police department in
West Virginia, asking about that same order.

Turns out that a woman in West Virginia had inadvertently left her
credit card on a checkout counter at a large department store. A
clerk at that store picked up the card, and used it to make several
online purchases. The clerk was having the purchases delivered to a
vacant house RIGHT NEXT DOOR to his own. This guy must have left his
brain cell in the fridge that day.

The above are both good examples of how WE, as Netrepreneurs, get
“scammed.” Maybe I’ve been luckier than most, but it has not happened
to me all that many times.

I caught the guy who was reselling my Directory on EBay. What I did
was this: The person who purchased the bootleg Directory was
naturally very upset. He had a fully functional copy of the
Directory. However, he would miss out on another 11 months worth of
valuable information in the form of monthly updates. I told him that
if I were able to catch this person and confirm what had happened, I
would see to it that his purchase was made good, and he would receive
the updates. He immediately sent me all the information he had on the
auctioneer. Sure enough, the auctioneer was a customer of mine. I
notified EBay’s fraud department (SafeHarbor@EBay.com). I then
contacted the perpetrator and elaborated on the penalties of
copyright infringement. He pulled his auction listings immediately.
We came to an agreement for restitution that I was satisfied with. I
suggested to him that he refund the other people to whom he had
already sold bootlegs, before THEY came after him.

The police in West Virginia caught the store clerk. They set up
surveillance at the vacant house next door, and waited for more of
his online purchases to arrive. After the case was prosecuted, we got
the jewelry back. All we lost was a few dollars in shipping charges.

If you’re in business, you’re a potential target. Protect yourself as
best you can. Use an AVS system when you accept credit cards. Confirm
large-dollar purchases before processing them. When people charge
thousands of dollars to buy large-ticket items from my sites, I
always contact that customer to verify the purchase. I caught two
stolen cards that way, BEFORE I got burned. Watch for multiple
purchases of the same item by the same person. They’ll end up being
re-sold out of the trunk of a car, and you’ll be stuck paying the
REAL card owner back. Be aware of protection programs like EBay’s
Safe Harbor. And if you think you’re being ripped off, don’t just
wait around to hear from someone about it. Contact the bank that
issued the card, and the police in the area you think the perpetrator
purchased from. They take credit card fraud very seriously.

Who knows? Maybe someday, someone will write a news story about it.

Chris Malta, http://www.DropShipSource.com, has been working on, teaching about, and spending way too much time with computer systems for 18
years. He publishes The Drop Ship Source Directory, which lists wholesale distributors of over 400,000 Name Brand products who drop ship for web site owners. He’s Webmaster and half owner of ElectronicDartShop.com, and lives, eats and sleeps on his keyboard.

More articles on protecting your online business against fraud and theft:
Don’t Be Victimized By Online Credit Card Fraud – Prevention Tips by T.J. Walker
Protect Against Theft Of Your Intellectual Property Online by Nancy Roebke