4 ms·

Transaction processors also face fines if the dispute percentage is too high. They don't have forbidden business lists just because they don't like pornography

by hibikir 10y ago

Transaction processors also face fines if the dispute percentage is too high. They don't have forbidden business lists just because they don't like pornography or sex toys. They can also be defrauded by merchants too: Make a fake business, make some fake purchases to yourself and after you get your money, disappear. Then a financial institution is the one holding the bag. That said, it's absolutely true that an online merchant needs protection from fraud, way past what anyone that isn't Amazon-sized can do on their own. There's third parties that do check prior to any processor. You can also rely on a processor that does more checking, or allows the merchant to made adjustments based on the level of risk they want.

MichaelBurge 10y ago
> They don't have forbidden business lists just because they don't like pornography or sex toys. Those are "high-risk" mainly because of "reputational risk", not because of chargebacks. Which I imagine is code for Visa or the banks thinking "If too many people with traditional morals get into political office, they'll start cracking down on us if we do business with the sex toy companies." https://en.wikipedia.org/wiki/Operation_Choke_Point https://en.wikipedia.org/wiki/Operation_Choke_Point There's also some bad history with old porn sites, since they used 0-days to install dialers on people's computers to rack up tons of money when they used their dialup to connect to the internet. Hence the old "I think my computer has a virus", "Quit browsing those weird porn sites" retort you may have heard. They did other shady things which got Visa in a bit of trouble. It doesn't happen much anymore, but I suspect the organizational scars remain. You've insinuated that pornography or sex toys are often "forbidden" because they have a high chargeback rate. But if you have 0 chargebacks after a few years, you still won't be able to negotiate a lower rate or to use a service like Paypal or Stripe. Because chargebacks aren't the reason. Visa and MasterCard charge you $500/year each as an extra fee too, so I suspect the Stripes and Paypals of the world can't combine them into their aggregate account. A fee like that would seem to preclude even a specialized aggregate account, without a special agreement with Visa. Also, if chargebacks were the issue, I would expect companies that only take debit cards to be in a different risk category than those that take credit cards. Debit cards have reduced fraud protection, so a Paypal or Stripe's underwriting should be more lenient for them. But I've never heard of Stripe letting you sell porn or of Visa waiving the fee if you only take debit cards. It could just be uncommon though. Plus, I believe both Paypal and Stripe ban selling porn even using e-checks, which is more evidence against chargebacks being the issue. There shouldn't be any restrictions on the ACH system, and even if there usually were somebody could set up a state credit union in Oregon or similar to handle it.
- aianus 10y ago
  ACH still has chargebacks. For up to six months after the debit, no less.
  - deleted 10y ago
    [deleted]
  - tyingq 10y ago
    It does, but the only allowable reason is "not authorized". Of course, for this type of fraud, that's the reason that matters. Thought it worth mentioning though, because in the CC world, a lot of the fraud is return fraud. Like "Item Not Received" or "Not as Described" being used when they aren't true.
    - mjevans 10y ago
      I wonder how much of "Item Not Received" is due to poor transport security, like delivering the item to someone's 'property' but just leaving it outside, unattended and unsecured.
      - tyingq 10y ago
        That's part of it. The chargeback system is a complete joke, however. I had one guy that I was very suspicious about, so I hired a PI to see if the item was visible in his small business, and take a picture. The tracking number showed the item delivered to the person, signed for with an known employee's name. I submitted this, as well as a picture of the item in the guy's shop. I still lost the chargeback. Got my revenge in the end though...see below. A tip for anyone that's has a particular chargeback where they know they were screwed. If the issuing bank has any presence in your state...sue the cardholder's bank (or perhaps Visa/MC/AMEX) in small claims. In my case, Chase settled for the amount I sued for, which I made sure was on the high side. They don't like to spend money on corporate lawyers going to small claims.
        seanp2k2 10y ago

by hibikir 10y ago

MichaelBurge 10y ago

> They don't have forbidden business lists just because they don't like pornography or sex toys. Those are "high-risk" mainly because of "reputational risk", not because of chargebacks. Which I imagine is code for Visa or the banks thinking "If too many people with traditional morals get into political office, they'll start cracking down on us if we do business with the sex toy companies." https://en.wikipedia.org/wiki/Operation_Choke_Point https://en.wikipedia.org/wiki/Operation_Choke_Point There's also some bad history with old porn sites, since they used 0-days to install dialers on people's computers to rack up tons of money when they used their dialup to connect to the internet. Hence the old "I think my computer has a virus", "Quit browsing those weird porn sites" retort you may have heard. They did other shady things which got Visa in a bit of trouble. It doesn't happen much anymore, but I suspect the organizational scars remain. You've insinuated that pornography or sex toys are often "forbidden" because they have a high chargeback rate. But if you have 0 chargebacks after a few years, you still won't be able to negotiate a lower rate or to use a service like Paypal or Stripe. Because chargebacks aren't the reason. Visa and MasterCard charge you $500/year each as an extra fee too, so I suspect the Stripes and Paypals of the world can't combine them into their aggregate account. A fee like that would seem to preclude even a specialized aggregate account, without a special agreement with Visa. Also, if chargebacks were the issue, I would expect companies that only take debit cards to be in a different risk category than those that take credit cards. Debit cards have reduced fraud protection, so a Paypal or Stripe's underwriting should be more lenient for them. But I've never heard of Stripe letting you sell porn or of Visa waiving the fee if you only take debit cards. It could just be uncommon though. Plus, I believe both Paypal and Stripe ban selling porn even using e-checks, which is more evidence against chargebacks being the issue. There shouldn't be any restrictions on the ACH system, and even if there usually were somebody could set up a state credit union in Oregon or similar to handle it.

aianus 10y ago
ACH still has chargebacks. For up to six months after the debit, no less.
- deleted 10y ago
  [deleted]
- tyingq 10y ago
  It does, but the only allowable reason is "not authorized". Of course, for this type of fraud, that's the reason that matters. Thought it worth mentioning though, because in the CC world, a lot of the fraud is return fraud. Like "Item Not Received" or "Not as Described" being used when they aren't true.
  - mjevans 10y ago
    I wonder how much of "Item Not Received" is due to poor transport security, like delivering the item to someone's 'property' but just leaving it outside, unattended and unsecured.
    - tyingq 10y ago
      That's part of it. The chargeback system is a complete joke, however. I had one guy that I was very suspicious about, so I hired a PI to see if the item was visible in his small business, and take a picture. The tracking number showed the item delivered to the person, signed for with an known employee's name. I submitted this, as well as a picture of the item in the guy's shop. I still lost the chargeback. Got my revenge in the end though...see below. A tip for anyone that's has a particular chargeback where they know they were screwed. If the issuing bank has any presence in your state...sue the cardholder's bank (or perhaps Visa/MC/AMEX) in small claims. In my case, Chase settled for the amount I sued for, which I made sure was on the high side. They don't like to spend money on corporate lawyers going to small claims.
      - seanp2k2 10y ago