Dear Community,
We have recently lost three chargeback cases due to credit card fraud from cards from North and South America. Both Visa and Mastercard failed to use 3D authentication, leading to rightful disputes by the actual cardholders. Unfortunately, this resulted in the funds being taken back from us. Some items had already been shipped and could not be stopped, despite us informing our fulfilment partner (BigBuy) within minutes. Consequently, the fraudsters received some the items. Are we going to be compensated for our losses due to their inadequate protection as well as their customers?
To add insult to injury, Shopify is aware of these fraudulent transactions as they flag them, but places all the responsibility to act correctly on the customer, even for those of us who are just starting out. As beginners, we were unaware that credit card fraud could still occur, especially since in Europe, authentication is mandatory. There are absolutely no warnings about this from Shopify when they have plenty of opportunity to do so when setting up the Shopify store.
We would have cancelled the flagged orders, but unfortunately, our fulfilment partner, BigBuy, processes orders automatically (within a few minutes), this even occurs when Shopify’s setting to manually capture payment is set. This should not be the default setting for new drop shippers; all orders should be manually reviewed initially. These fraudulent transactions could easily be detected and blocked by BigBuy as well, but they do not take such measures. We have been refunded by BigBuy for a couple of items so I will give them credit for that, but it shouldn’t have happened in the first place.
These many failings by the big companies, collectively enable fraud to occur, encouraging fraudsters to continue their activities. It is evident that they share lists of “easy targets,” as we have experienced repeated attempts by the same and new fraudsters since. This situation could be easily prevented by any or all of these companies. Instead, the financial burden falls on small merchants, while larger multi-national companies offer minimal protection despite taking our money for subscriptions. We pay nearly €1,000 per year to Shopify and over €1,000 to BigBuy and so we expect better protection.
We have had to suspend our trading for weeks following these fraudulent transactions to prevent major losses. Who will compensate us for this lost business? I am seriously considering not renewing our yearly Shopify subscription due to the added stress and worry this experience has caused.
This is a warning to all community members to protect yourselves, use Shopify Flow to automatically cancel high-risk orders (we were only informed of this feature after being scammed many times). Switch to manual Payment Capture in Shopify as well to give yourself time to check the authenticity of the customer and ask them questions before accepting their money. Additionally, instruct BigBuy to switch your integration to manual order review until they can offer better protection. We learned these lessons the hard way and hope our advice can help others avoid similar ordeals.
We will be exploring our options by consulting the E.U. Small Claims Court as this needs attention at a high level. I can provide a link if somebody else has been affected by this.
Best regards,
Kate
