5 ms·

just wondering how would you expect or how do other companies currently avoid fraud. The costs associated or added with constantly investigating fraud would al

just wondering how would you expect or how do other companies currently avoid fraud. The costs associated or added with constantly investigating fraud would almost seem like a deterrent in making a system useful.

steve8918 14y ago
If you look at Paypal's 10-K, they assume an automatic writeoff 4% of their revenues due to losses from chargebacks.
- hkmurakami 14y ago
  Almost seems like Paypal is making an effort to transfer that cost from their books to sellers.
tlogan 14y ago
I really don't know. For example, as MVP they could actually manually verify accounts (verify Facebook login, friends on that account, etc.). Also, at the beginning, maybe to allow only people in same city to do transaction. I know it is hard, but somebody much smarter than me could do it.
joonix 14y ago
Chargebacks are a part of doing business any time you accept credit cards, whether paypal is your merchant provider or not. The problem here is Visa/MC/Amex etc. Since you almost have to accept credit card payments these days, you're stuck with their terms. Since the banks all provide credit through these card providers, there's very little competition. There are numerous ways to virtually eliminate CC fraud but the card providers aren't interested in taking those measures, and neither are the big retailers. They are happy to accept the ~5% loss on chargebacks, because credit card users spend something like 30-40% more per transaction than cash payers. What we need is a competitor that disrupts credit cards altogether, not just merchant processing. Eliminate VISA and MC, who are basically skimming 2.5% off our retail economy. Cards are obsolete anyways. The processing side is obsolete, we don't need terminals that dial into a central processing machine, we can use the internet. The credit side (banks provide the credit line you get on your card, not Visa/MC) will take a bit more work, but we can combine it with the rise in peer to peer lending: you seek a credit line from a crowdlending site, not Chase bank.
- discountgenius 14y ago
  Bitcoin enables decentralized digital wealth transfers.
  - psionski 14y ago
    No chargebacks, escrow services for dispute handling, deflationary currency. Need I say more :)
    - himlion 14y ago
      all features, not bugs :)
      - psionski 14y ago
        You know what they say, some people's bugs are other people's features :) Well... actually I think noone says that, but they should start...
- mcherm 14y ago
  If the OP were the merchant for the credit card transaction, he would have provided the extensive documentation described and I have no doubt at all that the chargeback would NOT have gone through. (The evidence of previous fraud would probably have led to closing the card account also.) But the OP is NOT the merchant... PayPal is. I do not think that the fundamental problem in this case is the credit card system. (Although there certainly are OTHER problems with the credit card payment system that make it tempting to disrupt - but nearly impossible to disrupt because of entrenched powerful interests.)
  - codenerdz 14y ago
    Exactly! Paypal is the middleman here and they are preventing me from going directly to the credit card issuer and providing them with extensive documentation proving fraud. Not only that, they are making it extremely inconvenient to have any sort of communication with them
cmcewen 14y ago
Shameless plug - trying to help marketplaces with that problem with Credport (https://www.credport.org/ https://www.credport.org/).
callmeed 14y ago
The same way AirBnB does it: verify everything (phone, email) and provide social context ("You and the seller have 2 friends in common on Facebook"). You could go a step further and remove as much anonymity as possible. Of course, there are other ways to stop fraud which you'd want to do as well.
- angryasian 14y ago
  paypay already has your credit card and banking information. I think its more about having staff investigating it. For example in this type of story it may be clear, but otherwise its your word vs theirs type situations. With volume of sales, and probably the number of transactions, I imagine its not cheap.
- mistermann 14y ago
  Facebook has the infrastructure and population coverage to facilitate provide this service. They could charge for "Verified by Facebook" services. Hell, they could replace eBay and PayPal while they're at it, not to mention AirBnB, CraigsList, etc. They're stumbling around looking for a business model as it is, I don't know why they don't get into this. Sure, easier said than done maybe, but if anyone can do it, it is Facebook. Becoming the one site that has the single largest repository of known internet identities within it is the hard part.
  - bicknergseng 14y ago
    I've said the same thing for a couple of years. Their Oodle marketplace is anemic, despite having the ability to combat fraud issues in a way eBay, Craigslist, etc will never be able to. So bizarre to me they don't move into in a serious way. ecommerce
floppydisk 14y ago
In the instance of online auction marketplaces, you could create an escrow system where the seller ships the good to the auctioneer's warehouse (with some practical limitations) who verifies condition and that the good is legitimate (not stolen). Buyers pay money to the escrow company (e.g. Ebay) who ships the goods and send the money to the seller. Any chargebacks go against the escrow company who also happened to have validated the good and can use TOS/Legal Agreements to fight the chargeback on grounds of item quality. In this situation, they could also probably finagle a decent relationship with the CC processors to streamline the process and weed out fraud. Is that workable? Quite possibly. Is it probable? Probably not. Edit: Spelling

steve8918 14y ago

If you look at Paypal's 10-K, they assume an automatic writeoff 4% of their revenues due to losses from chargebacks.

hkmurakami 14y ago
Almost seems like Paypal is making an effort to transfer that cost from their books to sellers.

tlogan 14y ago

I really don't know. For example, as MVP they could actually manually verify accounts (verify Facebook login, friends on that account, etc.). Also, at the beginning, maybe to allow only people in same city to do transaction. I know it is hard, but somebody much smarter than me could do it.

joonix 14y ago

Chargebacks are a part of doing business any time you accept credit cards, whether paypal is your merchant provider or not. The problem here is Visa/MC/Amex etc. Since you almost have to accept credit card payments these days, you're stuck with their terms. Since the banks all provide credit through these card providers, there's very little competition. There are numerous ways to virtually eliminate CC fraud but the card providers aren't interested in taking those measures, and neither are the big retailers. They are happy to accept the ~5% loss on chargebacks, because credit card users spend something like 30-40% more per transaction than cash payers. What we need is a competitor that disrupts credit cards altogether, not just merchant processing. Eliminate VISA and MC, who are basically skimming 2.5% off our retail economy. Cards are obsolete anyways. The processing side is obsolete, we don't need terminals that dial into a central processing machine, we can use the internet. The credit side (banks provide the credit line you get on your card, not Visa/MC) will take a bit more work, but we can combine it with the rise in peer to peer lending: you seek a credit line from a crowdlending site, not Chase bank.

discountgenius 14y ago
Bitcoin enables decentralized digital wealth transfers.
- psionski 14y ago
  No chargebacks, escrow services for dispute handling, deflationary currency. Need I say more :)
  - himlion 14y ago
    all features, not bugs :)
    - psionski 14y ago
      You know what they say, some people's bugs are other people's features :) Well... actually I think noone says that, but they should start...
mcherm 14y ago
If the OP were the merchant for the credit card transaction, he would have provided the extensive documentation described and I have no doubt at all that the chargeback would NOT have gone through. (The evidence of previous fraud would probably have led to closing the card account also.) But the OP is NOT the merchant... PayPal is. I do not think that the fundamental problem in this case is the credit card system. (Although there certainly are OTHER problems with the credit card payment system that make it tempting to disrupt - but nearly impossible to disrupt because of entrenched powerful interests.)
- codenerdz 14y ago
  Exactly! Paypal is the middleman here and they are preventing me from going directly to the credit card issuer and providing them with extensive documentation proving fraud. Not only that, they are making it extremely inconvenient to have any sort of communication with them

cmcewen 14y ago

Shameless plug - trying to help marketplaces with that problem with Credport (https://www.credport.org/ https://www.credport.org/).

callmeed 14y ago

The same way AirBnB does it: verify everything (phone, email) and provide social context ("You and the seller have 2 friends in common on Facebook"). You could go a step further and remove as much anonymity as possible. Of course, there are other ways to stop fraud which you'd want to do as well.

angryasian 14y ago
paypay already has your credit card and banking information. I think its more about having staff investigating it. For example in this type of story it may be clear, but otherwise its your word vs theirs type situations. With volume of sales, and probably the number of transactions, I imagine its not cheap.
mistermann 14y ago
Facebook has the infrastructure and population coverage to facilitate provide this service. They could charge for "Verified by Facebook" services. Hell, they could replace eBay and PayPal while they're at it, not to mention AirBnB, CraigsList, etc. They're stumbling around looking for a business model as it is, I don't know why they don't get into this. Sure, easier said than done maybe, but if anyone can do it, it is Facebook. Becoming the one site that has the single largest repository of known internet identities within it is the hard part.
- bicknergseng 14y ago
  I've said the same thing for a couple of years. Their Oodle marketplace is anemic, despite having the ability to combat fraud issues in a way eBay, Craigslist, etc will never be able to. So bizarre to me they don't move into in a serious way. ecommerce

floppydisk 14y ago

In the instance of online auction marketplaces, you could create an escrow system where the seller ships the good to the auctioneer's warehouse (with some practical limitations) who verifies condition and that the good is legitimate (not stolen). Buyers pay money to the escrow company (e.g. Ebay) who ships the goods and send the money to the seller. Any chargebacks go against the escrow company who also happened to have validated the good and can use TOS/Legal Agreements to fight the chargeback on grounds of item quality. In this situation, they could also probably finagle a decent relationship with the CC processors to streamline the process and weed out fraud. Is that workable? Quite possibly. Is it probable? Probably not. Edit: Spelling