  |
||
| Merchant Newsletter - March 26, 2005 | ||
|
Chargebacks, Regulation E, and You. |
||
|
|
 Tax form scams are especially common at this time of year. One scam is a sophisticated operation in which fake tax forms are mailed to you. The forms are accompanied by a letter on bank letterhead. The most common fake form is "W-9095, Application Form for Certificate Status/Ownership for Withholding Tax" -- which doesn't exist. It looks similar to the genuine IRS Form W-9, "Request for Taxpayer Identification Number and Certification." The difference is that the real form, W-9, only requests your name, address and Social Security number. The phony letter notifies you that you must return the completed form within 7 days or your bank will be required by the government to withhold 31% of the interest on your bank accounts. Form W-9095 asks for bank account numbers, marital status, place of birth, parents' names -- and even passport information, work history, and passwords - a sure tip-off to a scam. the forms may look legitimate -- but unfortunately, this is just about everything a scammer needs for complete identity theft -- and/or to steal the money from your bank account! Another variant claims that the bank is updating its records regarding any interest income you have earned, in order to grant you a 'withholding' exemption. There may even be a 'threat' that if you don't return the form promptly, it could cost you some money because there will be a 'fine.' There seem to be two or three phony forms in circulation, and they all look authentic... until you inspect them more closely. For example, similar fake forms were labeled W-88BEN and W-8888. Using the mail to
perpetrate fraud is a most serious felony, and if you get one of
these, report it. The USPS and FBI take mail fraud very seriously,
and when they catch someone, they put the criminal in a small room with
stainless steel toilet for a very, very long time. Start
the process here, then call your local police department, who can
escalate it to the proper Federal authorities. WIN
A CASH PRIZE!
|
|
|
Regulation E, the "Consumer Protection" act, establishes the basic rights, liabilities, and responsibilities of consumers who use electronic fund transfer services and of financial institutions that offer these services. The primary objective of the act is the protection of individual consumers engaging in electronic fund transfers. Regulation E defines consumer rights to reverse electronic transactions that are fraudulent, incorrect, or unfair and has been expanded over the years with more extensions pending every day. The implementation of this regulation is seen by merchants in the form of a "chargeback". Enabled by this law, the card associations have shifted all "burden of proof" and liability directly to the merchant... you. This means that if a customer has ANY problem with a transaction within a given period, (generally 90 to 180 days, but we will see later how that can be extended) the card issuing bank can issue a chargeback, reversing the funds from the merchant's account back to the consumer's account. There are VERY narrow circumstances that allow a merchant to defend themselves. First, the merchant receives a notification called a "Retrieval Request" that allows them to provide the customer signature or "Proof of Delivery" to the billing address of the cardholder. If you get one of these, reply immediately with every scrap of information you have. If you call us, we can give you advice on your individual situation. Even if you comply with this request, there are circumstances where the cardholder can have the sale reversed anyway.. some examples would be claims of fraud, unusable goods, untimely delivery, misrepresentation, even "buyer's remorse", depending on the product or service).Some merchants mistakenly believe that a "No Refunds or Returns" disclaimer protects them... Rubbish. You can say anything you want, but a single phone call from your customer to their card issuing bank can begin an experience you do not want to have. In fact, you can INCREASE your liability through billing practices and / or warranties! If you sell a "one year" membership, your chargeback liability is not the standard 180 days, it is now a full year! You are much better billing your customers month to month. Published warranties can also extend the liability. A 5-year warranty can extend your liability to 5 years, and lifetime warranties may make it impossible to get a merchant account. Remember, this only applies to warranties YOU issue, not the manufacturer. If a manufacturer offers a warranty, and you are just the reseller, the customer's gripe (outside the 180 days) is with the manufacturer, not you. |
What about PayPal? When
my customer signs up, they agree
to give up "Chargeback Rights" and agree to PayPal's
dispute resolution. This is WORSE than garbage. The
customer still has the right to a chargeback (by LAW), and when they do,
Paypal suspends YOUR account, and FREEZES all your funds! They do this,
claiming that if one of your customers issues a chargeback, YOU are in
violation of their agreement. This is like playing "Russian
Roulette" with 4 out of 6 chambers loaded.
What can I do to protect myself? The best protection is CUSTOMER SERVICE. If a customer has a problem, make sure you are available to resolve it. Make sure your phone number is on your customer's credit card statement. This makes it easier for them to call YOU, rather than their credit card issuer. If the customer insists on a refund- GIVE IT TO THEM. It is cheaper to give a refund for a product than pay for the chargeback (which includes fees). You can often reimburse the customer for the product only, as customers generally understand that shipping fees represent services that HAVE been rendered (assuming UPS showed up on time). With a chargeback, you lose it ALL. Remember, if a customer calls for a return, be polite. You can "bully" them into saying "OK, I will keep it", but as soon as they hang up, they are calling their card issuer for a chargeback! Just because you don't have a retail "store" where people can return products, does NOT mean you do not have to give your customer's good service... Leading by example. Since 2001, Advanced Merchant Solutions has been offering exemplary customer support, and backing up all of our products with free upgrades, and exchange of defective units within warranty without charge. Not only has this kept us "chargeback free", but we receive dozens of referrals from our happy customers every day! One of our biggest referrers is someone who returned their equipment and closed their account because their business failed, but they had a LOT of friends, and were thrilled that we treated them as well "going out" as we did "coming in". The dangers of ignoring the issue are very serious indeed. VISA and Mastercard regulations provide for the termination of any merchant who has an unacceptable number of chargebacks. Being terminated for excessive chargebacks may prevent you from ever getting another merchant account! To recap: In
order to prevent and avoid chargebacks: |
|
|
|
||
|
Copyright (c) 2004 Advanced Merchant Solutions, Inc. All Rights Reserved |
||
See all of our newsletters in
our newsletter archive! Get tips and
tricks, previews of new product announcements, tips to prevent fraud, Free
stuff, and much, much more
Merchant Information is a newsletter that is available to all members of MerchantAnywhere.com and Advanced Merchant Solutions, Inc. This newsletter is provided as an informational tool designed to keep you up-to-date on the latest news and tools available for mobile commerce and merchant processing. As with all user information, we do not give or sell your personal information to any outside company for its use in marketing or solicitation. To unsubscribe from this newsletter, please reply with “REMOVE” in the subject line. All of our merchant applicants should be receiving this email newsletter. If you would like to subscribe, send an email with "SUBSCRIBE" in the subject to: merchantapp@merchantanywhere.com. If you are currently receiving the newsletter, and would like to be removed from the mailing list, send an email with the word "REMOVE' in the subject to: inform@merchantanywhere.com . Once removed, we cannot reinstate that email address, you must re-subscribe with another. |
||
|
|
||
ORDER
FREE MERCHANT MATERIALS HERE!!!