The eBay Marketplace is a vast world of sellers and buyers. The names “Powersellers”, “Top Buyers”, and “Top-Rated Sellers” are often found. The value of these status labels is that they project the seller or buyer to be dependable. What happens if an account is taken over, though?
Merchants (sellers) through eBay need to pay close attention when it comes to selling through the marketplace. Despite the efforts of eBay and its payment partners, fraudulent activities happen on a daily basis. Accounts are taken over, stolen credit cards are used, and fake email addresses are created.
An account takeover arises when an un-authorized third party hacks into an account. Once the fraudster has access, they can start bidding on auctions, change information on the account, and send emails to sellers. A few basic steps will mitigate the risk of fraudulent activity and satisfactorily complete the sale.
1) Get to know your customer: send an email, ask a question, and get as much documentation from your buyer as possible. The more knowledge you have of your customer, the lower the risk for the transaction to turn sour.
2) Require a Proof of Delivery, also called a POD, (preferably signed): Acquiring this documentation will show the buyer, in fact, received the product. If a chargeback occurs, the seller has documentation showing the product was delivered.
3) Check the eBay ID information: A buyer having barely signed-up, located in a foreign country (i.e. Tunisia, Malaysia, or Indonesia), can be a sign of an account takeover. Again, as previously stated, get to know your customer.
Some payment processors will offer services to help merchants avoid fraudulent transactions and chargebacks. For example, at ProPay our Risk department digs deep into accounts, and in some cases into transactions, in order to help our clients avoid fraud schemes. Remember, the eBay Marketplace holds millions of user accounts; fraud is bound to occur even in the face of controls put in place by eBay. Get to know your customer, require a POD, and rely on the eBay User ID to help prevent fraudulent activities from happening through your merchant account.

Square Inc. has recently informed the public they will soon be offering their card readers, which could result in a large increase in people accepting and initiating payment card transacions.  Believing demand will be sizeable; Square Inc. has discovered a problem needing to be addressed: risk and underwriting. 

Underwriting is the process merchant account providers use to assess the eligibility of a potential account holder.  This process involves several steps in the determination of the account status. Credit scores, business licenses, background searches via the web, and proof of identity are just a few items reviewed.  Checking these items will supply the merchant provider with information indicating how the merchant will operate with the account, or if the merchant is deemed “high risk”.

An account is conceived to be “high risk” when, for example, a credit score is low.  The Underwriting Officer may take this credit score and create outcomes of the account.  There is a possibility the account may have a significant number of chargebacks to the account, resulting in negative balances that cannot be recovered.  The officer might also find other types of businesses, that are prohibited, linked to the merchant, ending in the decline of the account.

ProPay, Inc. underwrites accounts daily having these, and other factors considered.  While ProPay’s exact underwriting process is proprietary, our new accounts are scrutinized through several associates and industry accepted standards, looking for anything  that could indicate an account would be considered “high risk” in a timely fashion.  ProPay takes a great deal of satisfaction knowing we are safe, fast, and affordable. 

Square Inc.’s approach, using “non-traditional fraud-prevention and underwriting tactics” (Digital Transactions News, http://digitaltransactions.net/newsstory.cfm?newsid=2589, July 22), will be using Facebook and Twitter in accepting new merchants.  How can social networking obtain or verify a merchant account?  For example, if a Facebook user has 250 friends, maintained the account for several years, rarely logs-in and hardly updates their status; does this make the Facebook holder reputable in attaining a merchant account?  Square Inc. negates the fact not all business men and women are avid social networkers.  How does having a certain number of “friends” or “followers” translate to being a savvy business owner?  If an older gentleman has never taken to the social networking mechanism, will this automatically bring an end to his underwriting review?

Underwriting should research backgrounds to discover if they will be good merchants with the least possible amount of risk.  Just because a merchant does not conform to the current craze of tweeting on Twitter or having friends on Facebook does not make them a “risky merchant” for underwriting purposes.  In fact, it’s quite possible it may have the opposite effect and make them less of a target for fraud.

Travis Allen: Risk Analyst

A recent article on MSNBC.com highlighted a new scam that federal agents say could lead to a new credit crisis. According to the article, seemingly legitimate businesses are selling social security numbers to help “rehabilitate” credit scores.  These credit scores usually belong to kids – those individuals with no credit histories that might preclude criminals from starting new accounts and piling up debt that they have no intention of repaying.  How can they do this? Semantics.

The sellers of the stolen numbers don’t market them as Social Security Numbers, rather they are marketed as “Credit Profiles” or “Credit Protection.”  It is, as identified in the article, “a legal grey area.”  The problem, aside from the obvious criminal nature of the activities, is that it’s very difficult to track.  When is the last time you checked your child’s credit history?  That means that people using these stolen numbers can build up significant amounts of debt without repaying it – which could precipitate another credit crisis.  MSNBC published a very helpful interactive guide to how this scam plays out. 

As a parent, how can you help protect your child’s future credit rating?  In 1989 a federal law was passed that required parents to register their newborns for a Social Security Number, so one can’t simply refuse to get a SSN for their child.  There are a number of products that parents can use to actively monitor their child’s credit activity, just as you would your own.  Additionally, you can contact the individual credit agencies – TransUnion, EquiFax and Experian.  They will be able to offer you information on how to check activity on your child’s Social Security Number.  Your child should not have a credit history with any bureau.

In today’s technologically connected world, it is important that we don’t take privacy for granted.  In the late 1800’s Justice Brandies defined privacy as “the right to be let alone.”  Certainly that still applies.  But as we evolve technologically, it must also include the right to appropriate use and dissemination of our personal information.  It has become increasingly difficult to track who has what information about whom.  While convenience is important, we must also evaluate the price of that convenience.  As merchants and service providers, we must guard our clients’ information as jealously as we would guard our own.  Be sure to do your due diligence on anyone that you might work with that would have access to your clients’ personal information.  One day, the SSN you save may be your own.

This morning while driving into the office I was listening to Headline News on Sirius (a plug for Sirius radio).  According to the story some banks are now using social media such as Facebook to determine an applicant’s risk rating and suitability for a loan.  If, for example, your facebook profile states that you have recently been fired or layed-off or are going through a divorce, this may indicate to the bank that you are a higher risk  (irrespective of your credit score) and you may be declined.  Conversely, if your ‘friends’ on Facebook are good credit risks the banks are more inclined to consider you a ‘good credit risk’ and approve the loan.  According to recent statistics over 500 million people are now on Facebook.  I am always somewhat surprised at the amount of personal information people will freely put on their Facebook account.   Now it appears that users should be even more careful as this information may be used to guage your suitability for credit.