There have been several threads recently on fraud, chargebacks and reversals...and many people saying the merchants are scamming publishers. This is sometimes the case, but not always. I think more often than not, most merchants are honest.
The timing could not have been any better for this. Today, I was reading through the thread involving BackCountryStore.com where an affiliate asked about reversals, etc. While I was reading that thread, I received an order for webhosting. Follow along with me here [img]/infopop/emoticons/icon_wink.gif[/img]
Here is the order I received (some information removed for privacy):

New Hosting Order:
Fullname: *****, Greg
Address:
** ****** Drive
Pittsburgh, PA
United States
15234
Telephone Number: (***) ***-****
Email Address: staff@*****-******.net
Domain: www.************.com
Hosting Package: Plan 5
Schedule: Yearly
Payment Method: Creditcard

This sale was for $335.58
Many of you are familar with 2checkout.com. Well, 2checkout approved the sale. So far, everything is checking out OK.

I looked to check and see that the domain ordered had been registered. It had not, but that is not unusual with new registrations. When somebody orders a new domain name, other registrars can show it still available for a number of hours after the initial registration.

Next, I checked the url in the e-mail address provided. It came up as a new registration at register.com. Nothing unusual about that either. I then ran a whois on the domain listed in the e-mail. That came up as (again, edited for privacy):

Organization:
**********
Alexander *********
Franzensbader Str.*****
Hoechstadt, BA *******
DE
Phone: ****-*******
Email: alexander.*******@epost.de

Registrar Name....: Register.com
Registrar Whois...: whois.register.com
Registrar Homepage: http://www.register.com

Domain Name: ******-********.net
Created on..............: Fri, Mar 22, 2002
Expires on..............: Mon, Mar 22, 2004
Record last updated on..: Fri, Mar 22, 2002

Administrative Contact:
Alexander *********
Franzensbader Str.*****
Hoechstadt, BA *******
DE
Phone: ****-*******
Email: alexander.*******@epost.de


Technical Contact, Zone Contact:
Register.Com
Domain Registrar
575 8th Avenue - 11th Floor
New York, NY 10018
US
Phone: 902-749-2701
Fax..: 902-749-5429
Email: domain-registrar@register.com


That of course raises flags. I called Greg ***** who alledgedly placed the order. He had never heard of me or TH Media. I explained to him that an order had been placed using his information, and that a credit card was used to charge the yearly hosting plan. This guy had no idea that his card number had been stolen until I called him. He may have never known until he received his statement, and with it being the first of the month, it could have been quite some time before he found out.
2checkout has a pretty decent screening process for cards, at least as far as I can tell. Whoever had his number also had all of his personal information. The sale was approved, and the card was never reported stolen. I am working things out with him and his bank as to how it should be handled. It seems that my sale would have maxed out his card, so he asked me not to refund it until I spoke to his bank. If I issue a refund, that makes his money available again (briefly).

Now, had I been running an affiliate program, and this sale came from an affiliate site, this would have been a reversal. In that case, it would have been a click/sign-up from an affiliate site, and the order would have been processed and the client card charged, and the affiliate would have received credit for an invalid sale.


Last month a similar thing happened. A customer signed up for a domain. In this case, a search in whois turned up no address (thank go-daddy for that). The info provided to me in the sign-up matched that on the credit card. This order was processed as well. A week later, I noticed that the user never set up their site, and never even logged into their control panel. I e-mail to see if they need some assistance in getting set up, and there was no reply. Another week went by and I phoned. No answer or answering machine. By now I'm assuming that it was fraud, but not quite sure. A month went by and still no reply either by phone or e-mail, and the client never touched their account. I went ahead and deleted it and canceled any recurring payments.
I sent a letter to the address provided explaining the situation. BTW, the phone number matched the name and address of the person in the phone directory. This would have been a reversal about 1 month after the sale.

If I were at CJ, what would my reversal rate be. Using the formula Todd provided, it would be quite high. Our average sale is on our Plan 3 paid monthly, yet I've just made a 'reversal' on a 335 dollar sale. Add the second sale in there, and your talking just under $400 in reversals, when our average sale is $20-$25 dollars.

By no means am I sticking up for any merchants comitting fraud against affiliates. My point is in many cases that a reversal is very legit, and the reversal % can be skewed because of it. You all know me to be an honest person, or probably wouldn't have a reason to distrust me...but what if I were a CJ merchant.

Even though I use only 2 examples above, this has happened on several occasions. It is the reason I do my homework on each domain for new sign-ups. Fortunately for us, I can can research it before I sign up. As in the case of BackCountryStore.com (or any other merchant) how would they know if it were fraud or not if the card isn't stolen. They don't have the whois of sunglass buyers like we do on domains. To top it off, I'm sure some of their fraudulent purchases actually show a shipping address that matches the card. This shows the card is good, and they can use it elswhere.

Tom Pyles