Selling online: the risks
How to make your online shop uninviting for fraudsters
John Sollars, founder of Stinky Ink, an online shop that sells printer ink cartridges, runs a successful business with a turnover approaching �1m a year. However, the story was very different when he started the company in the summer of 2002.
�Before he realised his mistake, he'd shipped goods worth �32,000 - he never saw a penny in payment.�
Almost as soon as he had launched the site, a ring of criminals placed orders for increasing numbers of cartridges. Before he realised his mistake, he'd shipped goods worth �32,000 - he never saw a penny in payment.
Only that December he was hit again, but a sadder and wiser man after the first sting, he saw it coming and took action. A London company sent an order for �12,000 with a delivery address in Nigeria. The cheque even arrived by courier and was accepted by his bank.
Cautious now, he decided to wait until it cleared before shipping the goods - despite increasingly urgent demands from the customer. On New Year's Eve the cheque bounced - John's instincts had served him well this time.
Easy to start, easy to lose
However, it's also easy for a fledgling online business to overlook basic security. The cost of a mistake - as Sollars found - is very real indeed. Luckily, there are a number of simple steps you can take to protect yourself against ecommerce fraud.
Learn to spot the warning signs that might indicate a dodgy order. These include:
If you suspect a fraud, there are some ways you can check:
�Take advantage of any fraud screening programs run by your payment services provider.�
There are other things you can do to avoid falling victim to a fraudster. Consider only delivering to credit card billing addresses, and run a credit check on new business customers. You can adopt a verification program, like Verified by Visa, and take advantage of any fraud screening programs run by your payment services provider. And make sure you get the customer's credit card security code (the extra three digits on the signature strip) and check it.
Don't be afraid to cancel an order and refund the amount. You may lose the profit if it turns out to have been legitimate, but if you don't get paid at all you'll lose the whole amount. Depending on your profit margin, you may need to make five or more sales to earn back the cost of a single fraudulent transaction.