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Checking accounts or merchant accounts? Most banks shy away from processing credit cards for adult sites because the chargeback rate is sky high and it therefor

Checking accounts or merchant accounts? Most banks shy away from processing credit cards for adult sites because the chargeback rate is sky high and it therefore presents elevated risk. It has nothing to do with discrimination.

tluyben2 7y ago
Or just fix that system; here (EU) it is not all that easy to chargeback (and impossible in many cases) because payments are secured; if you yell fraud, they will start an investigation (mostly automated); if the IP you paid from was around your house, you filled in correct info, you did 3dsecure (which is used on all my cards now; I had a few that did not have it and they got frauded, but a simple check showed it could not have been me and they reversed them all; they now have 3dsecure too for that reason) which means you knew specific secret information, maybe have a token device and/or the phone of the card owner, they will decline the chargeback request. If you are in your country most of the time and suddenly there is a 1000E charge from a merchant in Dubai, they will block it and call you. The ease with which you can do chargebacks in the US is harmful in a lot of cases imho. I have been a merchant (of digital goods; gaming, not gambling or adult) and got annoyed enough of US chargebacks (including from Paypal) that we started doing annoying KYC and added very long waiting periods before product delivery for US customers. We had certain payment methods (bank, and there were some payment methods that do not allow chargeback) that had immediate delivery. That fixed it, mostly. It hurts sales, but I rather make less revenue and more profit than pay for product only to lose it to scammers.
- barsonme 7y ago
  Pretty much everything you mentioned under "secured" payments occurs in the US, too.
  - tluyben2 7y ago
    Why is it so easy to charge back then? If it's secured then they know it was you... Unless you have a police report saying you were coerced, forced, something was stolen?
    - 4ad 7y ago
      Because US banks prefer to keep customers happy, unlike EU banks.
      - tluyben2 7y ago
        How does that work? If you can be sure it was owner initiated, then you allow, outside of some corner cases (which work here too), people to fraud merchants. That makes people happy? Edit; I know there are more reasons for chargeback and those you can get across the line here too, however, 'frivolous' chargebacks are not good for anyone but they are easy in the US.
        4ad 7y ago
        You are assuming that people only do chargeback in the case of some kind of fraud where other people stole your card details and spent your money. That is not the case. There are many other reasons to do a chargeback, far more reasons in fact.
      - perlpimp 7y ago
        AFAIK there it was put in the law(at least US/Canada) that credit card company have to return money and deal with fraudsters their way, CC companies have some really rabid investigators. If they behave improperly you can voice a complaint for financial regulatory authorities - banks really hate dealing with the government.
        4ad 7y ago
        Yeah, the law is on your (customer's) side in the EU also. Unfortunately people don't know that, so banks can afford to bully their customers into renouncing their claims. Technically if you are the type of person who knows how to deal with these types of problematic businesses that push you around, you will eventually prevail, but it will cost you a lot of time and effort. In my case, the financial loss was not high enough in order to waste even more than three trips to the bank. My partner's parents were hit hard though, about €5k. They argued back and forth with the bank for about 6 months to no avail. "Sorry, we can't do anything" type of answers. The bank also tried to trick them into signing "fraud forms" that in the fine print absolved the bank of any responsibility. It was only after I actually filed a claim with relevant financial authorities, and then hit the bank with that that they suddenly got their money back. The interesting thing is that this mentality is so prevalent that even the non-fraud department bank employees genuinely didn't know that the bank is supposed to actually help them. Many of them told us their own stories about how they were defrauded (I have no reason to suspect they were lying because they were family friends, and I heard the stories before our incident).
- jotm 7y ago
  Thankfully I've had better chargeback experiences with EU banks. I've only requested chargebacks on products I've not received, and provided my attempts to communicate with the seller. Always got my money back, but was blocked from buying from that merchant again (not that I'd try it after the bad experience).
  - 4ad 7y ago
    Anectodal, etc, but I could never get a chargeback in Europe. In the US it was always very easy. In the EU I couldn't get a chargeback even when the company said they mistakenly charged me twice, and that I should do a chargeback. I know that theoretically the law is on my side, but practically I found it to be a huge hassle in the EU.
  - tluyben2 7y ago
    I have had good chargeback experiences as well in the cases you name. I am talking about cases where it is clear where you are frauding the merchant which are still easy in the US. 3dsecure in most cases means you have to have coerced me AND have stolen my phone/token device. How would this warrant chargeback unless actually you did not receive your product and there is a clear trace of that. In this case indeed, you can chargeback. But not just randomly when you feel like it.
    - 4ad 7y ago
      3dsecure is security theater, I hate it so much. It doesn't matter if you have 3dsecure, because a scammer can use your card on some site that doesn't use 3dsecure. All 3dsecure does is making it harder for me to pay to legitmate websites in the EU. But wait, more often than not I can't pay at all because (in my case) 3dsecure uses SMS, and SMS delivery is unreliable, I can't get SMS from my bank when I travel to the US, or even some when I travel to some other EU countries. For me, it doesn't work approximatively 50% of the time. And of course, SMS 2FA is not secure at all. Now if there's fraud and the scammer used 3dsecure with spoofed SMS, good luck convinging the bank it wasn't you. "But SMS is not the only option" you say, "other banks have better 2FA", actually, I use other banks too. And they have something insane for 2FA: https://lobste.rs/s/1cyltz/two_factor_authentication_now_available#c_7mr82z https://lobste.rs/s/1cyltz/two_factor_authentication_now_ava....
- chc 7y ago
  The EU system is fine with fraud as long as the fraud involved tricking you into approving a charge? That doesn't seem right. So I could sell Rolexes for $50 and nobody could get their $50 back when I send them a toy watch from the Wal-Mart checkout line?

tluyben2 7y ago

Or just fix that system; here (EU) it is not all that easy to chargeback (and impossible in many cases) because payments are secured; if you yell fraud, they will start an investigation (mostly automated); if the IP you paid from was around your house, you filled in correct info, you did 3dsecure (which is used on all my cards now; I had a few that did not have it and they got frauded, but a simple check showed it could not have been me and they reversed them all; they now have 3dsecure too for that reason) which means you knew specific secret information, maybe have a token device and/or the phone of the card owner, they will decline the chargeback request. If you are in your country most of the time and suddenly there is a 1000E charge from a merchant in Dubai, they will block it and call you. The ease with which you can do chargebacks in the US is harmful in a lot of cases imho. I have been a merchant (of digital goods; gaming, not gambling or adult) and got annoyed enough of US chargebacks (including from Paypal) that we started doing annoying KYC and added very long waiting periods before product delivery for US customers. We had certain payment methods (bank, and there were some payment methods that do not allow chargeback) that had immediate delivery. That fixed it, mostly. It hurts sales, but I rather make less revenue and more profit than pay for product only to lose it to scammers.

barsonme 7y ago
Pretty much everything you mentioned under "secured" payments occurs in the US, too.
- tluyben2 7y ago
  Why is it so easy to charge back then? If it's secured then they know it was you... Unless you have a police report saying you were coerced, forced, something was stolen?
  - 4ad 7y ago
    Because US banks prefer to keep customers happy, unlike EU banks.
    - tluyben2 7y ago
      How does that work? If you can be sure it was owner initiated, then you allow, outside of some corner cases (which work here too), people to fraud merchants. That makes people happy? Edit; I know there are more reasons for chargeback and those you can get across the line here too, however, 'frivolous' chargebacks are not good for anyone but they are easy in the US.
      - 4ad 7y ago
        You are assuming that people only do chargeback in the case of some kind of fraud where other people stole your card details and spent your money. That is not the case. There are many other reasons to do a chargeback, far more reasons in fact.
    - perlpimp 7y ago
      AFAIK there it was put in the law(at least US/Canada) that credit card company have to return money and deal with fraudsters their way, CC companies have some really rabid investigators. If they behave improperly you can voice a complaint for financial regulatory authorities - banks really hate dealing with the government.
      - 4ad 7y ago
        Yeah, the law is on your (customer's) side in the EU also. Unfortunately people don't know that, so banks can afford to bully their customers into renouncing their claims. Technically if you are the type of person who knows how to deal with these types of problematic businesses that push you around, you will eventually prevail, but it will cost you a lot of time and effort. In my case, the financial loss was not high enough in order to waste even more than three trips to the bank. My partner's parents were hit hard though, about €5k. They argued back and forth with the bank for about 6 months to no avail. "Sorry, we can't do anything" type of answers. The bank also tried to trick them into signing "fraud forms" that in the fine print absolved the bank of any responsibility. It was only after I actually filed a claim with relevant financial authorities, and then hit the bank with that that they suddenly got their money back. The interesting thing is that this mentality is so prevalent that even the non-fraud department bank employees genuinely didn't know that the bank is supposed to actually help them. Many of them told us their own stories about how they were defrauded (I have no reason to suspect they were lying because they were family friends, and I heard the stories before our incident).
jotm 7y ago
Thankfully I've had better chargeback experiences with EU banks. I've only requested chargebacks on products I've not received, and provided my attempts to communicate with the seller. Always got my money back, but was blocked from buying from that merchant again (not that I'd try it after the bad experience).
- 4ad 7y ago
  Anectodal, etc, but I could never get a chargeback in Europe. In the US it was always very easy. In the EU I couldn't get a chargeback even when the company said they mistakenly charged me twice, and that I should do a chargeback. I know that theoretically the law is on my side, but practically I found it to be a huge hassle in the EU.
- tluyben2 7y ago
  I have had good chargeback experiences as well in the cases you name. I am talking about cases where it is clear where you are frauding the merchant which are still easy in the US. 3dsecure in most cases means you have to have coerced me AND have stolen my phone/token device. How would this warrant chargeback unless actually you did not receive your product and there is a clear trace of that. In this case indeed, you can chargeback. But not just randomly when you feel like it.
  - 4ad 7y ago
    3dsecure is security theater, I hate it so much. It doesn't matter if you have 3dsecure, because a scammer can use your card on some site that doesn't use 3dsecure. All 3dsecure does is making it harder for me to pay to legitmate websites in the EU. But wait, more often than not I can't pay at all because (in my case) 3dsecure uses SMS, and SMS delivery is unreliable, I can't get SMS from my bank when I travel to the US, or even some when I travel to some other EU countries. For me, it doesn't work approximatively 50% of the time. And of course, SMS 2FA is not secure at all. Now if there's fraud and the scammer used 3dsecure with spoofed SMS, good luck convinging the bank it wasn't you. "But SMS is not the only option" you say, "other banks have better 2FA", actually, I use other banks too. And they have something insane for 2FA: https://lobste.rs/s/1cyltz/two_factor_authentication_now_available#c_7mr82z https://lobste.rs/s/1cyltz/two_factor_authentication_now_ava....
chc 7y ago
The EU system is fine with fraud as long as the fraud involved tricking you into approving a charge? That doesn't seem right. So I could sell Rolexes for $50 and nobody could get their $50 back when I send them a toy watch from the Wal-Mart checkout line?