Friendly Fraud / Fake Chargebacks - Shopify's Negligence to basic Seller Protection

ConradQ
Tourist
8 0 2

Does anyone know of a well organized petition or other action against Shopify for their lack of basic duty to offer Seller protection or options for recourse in cases of theft? 

Shopify's lack of seller protection is appalling. Their payment processor - Stripe - offers chargeback protection for 0.4% on transactions. They could at least pass on this protection option. 

The fact is that Shopify sellers are sitting ducks for theft through fraudulent chargebacks simply because Shopify fails their Sellers on even the most basic support. 

As others have stated, Shopify offers zero support in cases of "friendly fraud" / fake chargebacks - they state that you have to work with the customer's financial institution, and then they tell you they can't offer you any information on who that financial institution is or how to contact them. In the last 3 months my company has lost $1,816 to fraudulent chargebacks. These are cases that have an abundance of evidence to demonstrate that the company fulfilled every obligation to the customer and that the customer is just being dishonest. The removal of funds from the company's account amounts to nothing short of left - and Shopify protects this theft and offers no remedy to seek recourse. 

Shopify and others will advise and caution sellers to focus mitigating risk rather than seeking recourse to fraud. However, in the 3 instances I mentioned there was zero risk that could be mitigated. These are cases of the most ridiculous customer behavior (like trying to return a used product even after the allotted return period) where business must exercise their legal right to enforce certain policies that are in place to fulfill legal requirements and general quality assurance policies. You can't return a used bandaid for example. Unfortunately, card companies and selling platforms like Shopify and Amazon encourage a culture of dishonest and fraudulent behavior by rewarding overly entitled buyers who treat "friendly fraud" like it is an every day tool to twist the arm of hard working businesses into giving them what they want every time. 

Companies have a legal right to enforce the Terms and Conditions of their sales. Shopify has created a barrier to companies exercising their legal rights. 

At this point it is costing me enough money to motivate me to change platforms altogether - or build a fully custom website. I like the ease that Shopify provides as selling platform in many ways. Shopify has designed it so that they appear to be a passive player in this issue (they simply state that they are not the payment processor nor are they the financial institution, so they have no power), and yet they are the main obstacle to basic recourse and justice in cases of theft. They do not even pass on the benefits offered by their payment processor (Stripe), which would be easy to do. I am very willing to join a petition or even legal action against the platform - if you know of a well organized one please reply here. 

Bulxar
Excursionist
28 1 8

Click to expand...
I REALLY WANT TO HELP YOU AND MAKE THIS PLATFORM LITTLE BIT MORE COMFORTABLE

 

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ConradQ
Tourist
8 0 2

& pay a 3rd party for insurance against Shopify's designed fraud protection? 

While an option (and one we are already considering), it is not an adequate solution to the root issue. 

It seems like you may be marketing for one of those paid services / plugins they way you're responding to both posts on this topic. 

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Bulxar
Excursionist
28 1 8

Oh no, I hate paid apps  ConradQ.

My monkey says that using paid APP'S when it should be built-in function is ridiculous .

ConradQ
Tourist
8 0 2

Agreed! 

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tacowaffle
Tourist
4 0 1

I have the opposite problem.

Hundreds if not over a thousand transactions with Shopify merchants over the years with zero problems.  No returns. No charge-backs.  Happy happy happy! That is until suddenly Shopify started flagging every single one of my purchases as fraudulent, and since I'm not a paying Merchant, Shopify won't even bother with me. 

Oh, you see, Shopify wants you, the Merchant, to make the decision as to whether or not I'm a legitimate individual looking to engage in legitimate commerce after they falsely flag my order. And unfortunately for me, many merchants blindly trust Shopify's "machine learning fraud analysis algorithm" and won't provide me the chance to prove I'm not some nefarious fraudster kingpin. 

I can't help but wonder how many sales Shopify merchants miss out on because of a faulty fraud alert system.

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ConradQ
Tourist
8 0 2

We manually verify every single fraud alert. 

We've had every case happen - fraud we caught and voided, fraud we didn't catch that screwed us over (our fault), and false fraud alerts that we were able to verify as authentic purchases. Lately we've had several fraud alerts that were false alarms. Verifying an authentic individual / purchase feels like a shot in the dark each time, but we're willing to make the effort. 

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Bulxar
Excursionist
28 1 8

I SUGGEST TO HAVE OPTION FOR MANUALLY CAPTURING PAYMENTS OF MEDIUM OR/AND HIGH FRAUDULENT ORDERS.

BECAUSE IN THIS CASE YOU DIDN'T GOT THE MONEY FROM FRAUD CSUTOMER, SO YOU DON'T NEED TO REFUND ANYTHING.

 

IS THIS MAKE SENSE ?

tmpd4etn3vt.gif

Fraud analysis pending

Fraud analysis typically happens immediately, but in rare cases the process can take a few minutes. If you see a message in an order stating that fraud analysis isn't available yet, then you can try refreshing the page or check back in a few minutes.

It's a good idea to wait for the fraud analysis to finish before you fulfill the order.

 

SO YEAH SHOPIFY, IT'S A GOOD IDEA TO WAIT FOR FRAUD ANALYSE BEFORE CAPTURING PAYMENT

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disputify
Tourist
12 1 3

Hey Conrad,

We're working on an app specifically designed to capture refund/friendly fraud, would be great to hear your thoughts, it's available at https://apps.shopify.com/disputify (Free plan available)

Disputify fraud and fraudulent refund detection, free plan available: https://apps.shopify.com/disputify
ConradQ
Tourist
8 0 2

Unfortunately this is not helpful as you have not understood my original post. 

Of course fraudulent transactions will occur and the Fraud Analysis feature in Shopify is useful in flagging some potential fraudulent transactions. This will happen from time to time. 

My issue is "Friendly Fraud" that is perpetrated by customers who are simply acting in an entitled manner to bully businesses and get their way. For example: A business has a return policy that you have 20 days after purchase to return a tee shirt in NEW condition with all original tags in place. Customer "Sara" purchases a tee shirt, and then tries to return it after 50 days. The business says "I'm sorry, this return request has been rejected because you are outside of the return period." Sarah then files a chargeback because she doesn't like the policy. The bank sides with Sarah, and immediately takes the funds from the businesses' account. The business then asks Sarah "Since your bank sided with you, please return the tee shirt in new condition so we can add it back to our inventory". Sarah returns the tee shirt covered in ketchup stains. The business loses the inventory and loses the money from the sale. 

Businesses have a legal right to enforce terms of sale. Shopify stands in the way of any option for proper recourse by hiding the financial institution's name (Mastercard, Visa, etc are just brand names and are not the bodies that make the decision on the case). 

Working with an ombudsman seems to be the only recourse. Again, placing an undue burden on the business to spend resources recovering money that was illegally stolen. 

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