Chargeback on high risk orders

[Kbeauty4u]

Hello everyone,

I have been selling on Shopify for over 2 years very smoothly with very low rate of chargeback. But recently, starting from Jun 2nd, my business received a considerable number of high risk orders with all Chinese names and they all share one shipping address which is 6215 NE 92nd Dr, Portland Oregon 97253 and it is a freight forwarding company. My staff sent emails to verify them but we did not ask for ID card or credit card info with matching name so we trusted them at some point and fullfilled the orders. Consequently, now we are receiving a lot of chargeback from these customers. They are abusing the chargeback system to get our products for free. It is also our fault to not verify these customers correctly and took the risk. Has any of you experienced this before? And do you know what will happen to our Shopify account if we got so many chargeback from high risk orders? I am so desperate right now because I know that we lost all of those products, have to deal with chargeback and fees, and get no money from Shopify because shopify payment is on hold due to this situation.

[JoesIdeas · Accepted solution]

I'm sorry to hear that, it's really frustrating how chargebacks work, almost always gets sided with the customer, even when they're clearly scamming.

I think every store I've worked with that does volume gets chargebacks, it's part of online business, so it's not abnormal to get some chargebacks.

I found this from Shopify documentation that they may suspend your payments account if "too many" - https://help.shopify.com/en/manual/payments/chargebacks.

I don't know how many is too many but if you're worried about it you could try contacting them, to be proactive about it.

Moving forward, couple of tips:

- For all high risk orders do a check with customer support (ask for identification and even a selfie if you want to be extra vigilant, and include in the email a basic agreement that they will not file a chargeback, that may help you win the case if they do).

Just explain to the customer that you've been the victim of scams lately, you don't save the information, this is just a security measure. 

- If it's not a high risk order, you'll want to then identify the type of buyer (like same address like you said) and cancel their orders.  If you're doing low volume and check every order then just cancel the order. If you don't want to manually check, Order Automator can identify orders based on data like this, and notify your support staff (or even auto cancel if you want). There's also a free version of Order Automator that includes a Fraud Guard, to alert staff or cancel high / medium risk orders. That could help you stay on top of those type of orders easier.

Good luck, I hope you're able to stop the scams happening to you.

[AthenaGaia]

Just got a fraud alert on the same address: 6215 NE 92nd Dr, Portland Oregon 97253 and googled the address to find your post, so thank you. 

I canceled immediately. Shopfiy should have some sort of alert, and you should probably cancel most of them. A few fraud alerts have been valid once we've spoken to a customer and realized they were on an VPN for work (IP not recognized).
But definitely avoid 6215 NE 92nd Dr, Portland Oregon 97253 and this one: 
8344 Northwest 66th Street 12290 Miami FL 33166 (anything at 8344 Northwest 66th Street).
I would avoid all "logistics" or "import/export" shipping places. I see a lot of eBay posts saying these places do receive the items, but claim they never did, or do a chargeback. And you also lose every shipping claim if it's landing there and has tracking that says it landed there. 
Chargebacks are beyond frustrating and yes always lost as the seller. 

Check your abandoned carts, too. I was up late one night and watched live as someone (or a robot) attempted almost 40 checkouts using different names and cards and address, all within minutes, but also for the same high value item (we sell gold, so it's tricky). All didn't make it past Shopify that time, thank goodness. So we knew to be on alert if that item sold we'd be checking every aspect of the seller. 

[Kbeauty4u]

Update: Thank you guys for the responses! Here is the update after all chargeback. I received 40 chargeback in total and lost about $12,000 value. I’m still in process of disputing the chargeback but I have no hope that I will get that money back. Sean from Shopify Safety and Trust team helped me go through the verification process and also advised me to install Fraud Control app so I have been using the app called NoFraud Fraud Protection. I also set up Auto cancel on high risk orders in this app so now I feel more relieved that those high risk orders cannot scam my business again, despite the fact that I lost so much money. Shopify released the money on hold after Sean and I worked together so thank you Sean and Shopify teams that are trying to protect sellers like us. I learnt a valuable lesson from this and it will not happen again for sure.