about some antifraud tools and also haven given some numbers about fraud in general, about the average number of tools employed by the e-commerce companies.

I elaborated a little on the IP geolocation, the cardholder 3D authentication and the AVS instrument and also the problematic issue of chargebacks.

According to a 2007 Cybersource fraud report, there seems to be an alarming 4.2% order rejection rate for digital goods which I consider high, when compared to the 1.5% average rejection rate that Avangate had in 2007.

This 4.2% is explainable by the high fraud attempt rate (remember we deal with USA in the report conducted by Cybersource) or by the desire of merchants not to resort to specialized e-commerce companies, which might result in rejecting valid orders.

Bu yeah, in the end it is really frustrating for merchant to be charged back when he is “not guilty”.

My 2 cents :)
Bogdan

1) CC purchase results in a serial being emailed that grants 30/60 days access to the product, with perhaps a 14 day grace period.

2) After 30/60 days, the customer is required to go online to activate the product. Activation will only be available after this time, so hopefully any chargebacks will have been made, and the activation can be rejected if necessary.

Not sure how many sales you’d lose as a result, it might be worth an experiment depending on how much you’re losing to CC fraud.

Not only that but it makes you think about the motivations of credit card companies. They actually make more money on fraudulent credit card purchases than normal purchases!!! The only reason they want to prevent fraudulent purchases is because they would lose all credibility otherwise and no one would use their credit cards.

So as an incentive, they only need to be good enough to keep consumer confidence at a reasonable level. Nothing more. It’s actually an economic dissentive to reduce all credit card fraud. If you do the math of the costs of 0% fraud versus the current system, you’ll see that they’re much further ahead now.

Until the motivations change (for example through legislation), there’s no motivation for credit card companies to reduce fraud any more than it already is today. That’s sad!

I was also so annoyed with this that I ended up writing an article on it a while back on my blog Andy. If you haven’t picked it up, you can check it out at: http://www.followsteph.com/2007/04/30/why-theres-still-credit-card-fraud/

And thanks for sharing! Insane isn’t it? Especially the chargeback fees. I can accept the money being returned, but charging me for your own mistake. WOW!!!