Victim of a scam

Many of you would have seen my blog post last month about how I became a victim of a credit card scam. Not something I would wish on any of you. How did it happen?

Someone chose to purchase a number of small order items from my website via an affiliate site. To date I still don't know if the affiliate was the perpetrator, although at this stage it looks like he/she was the only benefactor in this scam through Affliate fees received. However, I have been told that a number of shopping cart sites have been hit by Chinese hackers and these include Coles, CafePress and SingleThemes.com with the exact same scenario. It appears I'm not the only victim merchant.

The monies have been refunded to those who have been in contact with me but I expect I'll still hear from others. I didn't refund every purchase straight away because I couldn't be sure which were fraudulent and which ones were real. I lost a lot of product (books) in the process and paid out for postpaks and postage, plus merchant fees. It appears I'm not covered by business insurance for this at all and the banks only protect the 'customer', although in this instance I'm also their customer. But I'm viewed as the 'merchant' and in their agreement I have to honour any chargebacks or refund requests, especially since I haven't sighted the credit cards used for the purchases. So I'm a lot of money out of pocket for something that wasn't my fault and someone has gotten away with doing the wrong thing.

What could I have done to avoid this? Not a lot unfortunately. The Australian banks do not match up names and addresses to credit card numbers and even if they did, the majority of fake purchases done on my site still had the products being sent to the owners of the cards - although not in all cases. But in EVERY single case, the email address was not the owner's email address and there was no way I could know this. They'd set up fake addresses and went to a lot of trouble to pull this scam.

Why would they do this? Your guess is as good as mine. The bank fraud dept seemed to think they were testing the cards before using them for bigger more expensive orders for things they wanted. But another theory has been put forward that the Chinese doing this are in it for the affiliate fees and might not even know they're committing fraud. They may have been engaged by someone else to do these purchases with the promise of affiliate fees. My husband and I had felt the only person who really benefited was the affiliate - I'd paid them affiliate fees before finding out about the fraudulent activity. On checking their site I find they are an affiliate for many other products too. Their details have been passed on and I hope the police are able to get to the bottom of it soon so the other merchants are protected.

I've checked with my payment gateway and discovered something they had on their online system, that they hadn't told me about when I opened the account a few years ago. I questioned them about this and they said they don't send out newsletters and expect their clients just to explore their system. Perhaps I should have, but all the same you'd think they'd have some tips on how to best make use of their service and how to protect yourself against possible scams. I've had to switch off accepting credit card payments from overseas which means that this will cause challenges for real customers and also for me in accepting their payments online. I'm still working through what that entails. I've currently removed a number of products from my shopping cart and will gradually re-introduce them and monitor for lots of small orders in quick succession. My apologies to any affiliates who want to promote products as obviously this will affect you also.

What can you do to ensure this doesn't happen to you? Keep aware. If you start getting a lot of sales for a product that you don't normally sell much of, probably best to hold off sending the product till you can verify the purchase is genuine. I had actually emailed some of the purchasers to find out where they found out about my books and they pointed me to a site that was promoting it. I contacted this person and they told me they were promoting via Facebook and Twitter. However, I've since found out that the email responses were via fake addresses and I wasn't really hearing from the owners of the cards. The email address might be fake, as it was in my case and the confirmation you receive back may not be from the person it should be. This may mean writing a letter or making a phonecall if that information is available as being the best course of action. I'm in the process of updating and changing forms on my site to try and get more information about the purchasers before I send products - a pain for both sides!

I hope you have a great month!

Kathie