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  1. #1
    ABW Ambassador SunshineTricia's Avatar
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    May 7th, 2006
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    Preventing Fraud in Loyalty Sites
    One of the biggest issues that we ran into early at my site was fraud. We had no idea how many people out there were just waiting for a new cash back site to pop up so that they could try their "techniques" on us. On the opposite side of the fence, a number of merchants said that they did not want to work with loyalty sites because of the high incidents of fraud.

    Let's talk about how we can keep fraud down for our sakes as well as our merchants. What do merchants like to see us doing? What do you do to keep fraud down?

    I'll start with the one thing that has helped us the most--holding funds. We used to credit member accounts within a few days of purchase and then allow them to cash out quickly. We now hold all shopping funds for 21 days after purchase. In addition, when people cash out, we hold the funds until the middle of the next month.

    While I know that there are still people who want to "game" us, this has dramatically cut down on the number of people who make purchases and then try to return them quickly and still cash out.
    --Tricia Meyer-- I love being the exception to the rule.

    Tricia Meyer | Helping Moms Connect | Wine Club Reviews and Ratings | Hunger Games Fan

  2. #2
    Comfortably Numb John Powell's Avatar
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    October 17th, 2005
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    Bayou Country, LA
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    Quote Originally Posted by helpingmoms
    Let's talk about how we can keep fraud down for our sakes as well as our merchants.
    I can't add much to this since my model won't allow much room for fraud. It's designed for charities to get the money and their supporters only get the satisfaction of helping out.

    Having said that maybe a model that allows more fraud would be better for me than the set up I have. It's all still fairly new for me and I'm learning as I go.

    We will probably have to wait till more folks are directed to this forum to get a lot of action going.


  3. #3
    Believe knight01's Avatar
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    As for preventing fraud from users, what you're doing is probably the best way to slow it down. From date of purchase to payment sounds like it is up to 45 days or so... might even go a little longer than that to be safe.

    I've seen ip tracking be used, if a user is logging in from multiple ip addresses or through an open proxy it would be a good idea to hold the cash even longer.

    A check for the first payment, and no p.o. boxes allowed. Users looking to scam aren't happy with having to give a real postal address. Only after the first check has cleared your bank would you allow other payment options.

    You could go so far as a 'welcome' phone call and postal letter with 'bonus'. Call the user, if you require a phone number during registration. Let them know you've sent a welcome packet to them that includes a 'sign up' bonus code. Give'em $5.00 for entering the code. This way you've made contact, talked with them and verified an address without them knowing what you're doing.

    Flag users that sign up and start making lots of purchases real fast. Probably goes without saying, they may make one or two in the first few days, but more than that would make me nervous.

    As for the merchants, show them your fraud prevention system. Explain what has to be done to become a verified member. Some will go along, some will not. You can't win them all.

    I'm sure there are others that have thought about this more than me. I look forward to other ideas as I try to layout my own venture back into the loyalty/rebate space.
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  4. #4
    ABW Ambassador SunshineTricia's Avatar
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    We used to only allow one account per IP address. But that was blocking a lot of people who shop at work (which we know is huge). Now I do have the system email me when someone signs up with a duplicate IP address. I check the accounts for names, addresses, etc. to see if there is anything fishy.

    Unfortunately, it seems like a lot of it is gut instinct when an account doesn't "feel" right, it usually isn't. But I hope to be big enough someday not to have so few members that I can review every single cashout. LOL!

    We actually had a fraud type issue with Apple. Someone was hitting all of the loyalty sites and buying iPhones to sell overseas. When I saw the purchases, I tracked the guy down and called him. He sounded totally legit. But I thought he was buying computers, not iPhones based on the big purchase amounts. Turns out he was buying the iphones and then cracking them and selling them overseas. Thankfully, Apple brought it to my attention quickly because neither of us wanted to be involved at all in something like that.
    --Tricia Meyer-- I love being the exception to the rule.

    Tricia Meyer | Helping Moms Connect | Wine Club Reviews and Ratings | Hunger Games Fan

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