Monday, June 17, 2024

When Your Customers Steal

You know it’s a slow news day when the news programs on TV turn
their attention to their favorite new consumer warning. “Beware
of online businesses!” they cry. “YOU could be SCAMMED on the

Every time I see one of these news stories, I groan, and wonder how
many sales my sites just lost. Then there are the ads for that
new credit card that “protects” consumers against online fraud.
They make Internet businesses people look like a bunch of thugs
who meet in a sewer all day long to torture innocent consumers.

There a lot more honest, hardworking Netrepreneurs out there
than scam artists. That doesn’t make for a good news story,
though, so we all take the lumps for the transgressions of a
sordid few.

You know what I’ve never seen, though? I’ve never seen a headline
story about the CUSTOMERS who scam the Netrepreneurs. I’ve seen
stories about thieves robbing convenience stores. I’ve seen
exposes featuring the practices favored by professional
shoplifters. What about the “consumers” who target online
businesses when they steal?

I market both informational products and brand name merchandise on
the Internet. And I’ve been taken on both sides of the fence.

I publish a B2B (business to business) product called The Drop
Ship Source Directory. Recently, I received an email from someone
who bought my Directory on EBay, and had questions about how they
were to receive the information updates I send my customers every
month. There was only one problem.

I don’t SELL my Directory on EBay.

I was forced to write back to that person and tell him that he
had been scammed. It was obvious to me that someone had purchased
my product from me, and was reselling it to others illegally. How
this scam artist expected to get away with reselling the product,
I’ll never know. It contains nearly a thousand pages. There is a
copyright notice on EVERY SINGLE PAGE. It’s like me buying Stephen
King’s latest book on Amazon, typing it up into electronic form,
and then reselling it on EBay. I’d have to be nuts to try
something like that!

Last year, a site I was working with received an order for some
moderately expensive jewelry. Nothing out of the ordinary. The
credit card processed just fine, with the AVS (Automatic
Verification System) coming back “green”. This means that the
online processing system had checked the card’s information
against the on-file address and zip code of its owner, and
everything was OK. The Ship-to address was different from the
card owner’s Bill-to address, but that’s nothing out of the
ordinary either. LOTS of people buy jewelry and have it sent
as a gift to another address.

A while later, we received a “chargeback” letter from the
customer’s bank. A chargeback means that the card owner has
disputed the charge, and we have to show cause why we should
not refund the money. At about the same time, we got a phone
call from a police department in West Virginia, asking about
that same order.

Turns out that a woman in West Virginia had inadvertently
left her credit card on a checkout counter at a large
department store. A clerk at that store picked up the card,
and used it to make several online purchases. The clerk was
having the purchases delivered to a vacant house RIGHT NEXT
DOOR to his own. This guy must have left his brain cell in
the ‘fridge that day.

The above are both good examples of how WE, as Netrepreneurs,
get “scammed”. Maybe I’ve been luckier than most, but it
has not happened to me all that many times.

I caught the guy who was reselling my Directory on EBay.
What I did was this: The person who purchased the bootleg
Directory was naturally very upset. He had a fully functional
copy of the Directory. However, he would miss out on another
11 months worth of valuable information in the form of
monthly updates. I told him that if I were able to catch
this person and confirm what had happened, I would see to
it that his purchase was made good, and he would receive
the updates. He immediately sent me all the information
he had on the auctioneer. Sure enough, the auctioneer was
a customer of mine. I notified EBay’s fraud department
( I then contacted the perpetrator
and elaborated on the penalties of copyright infringement.
He pulled his auction listings immediately. We came to an
agreement for restitution that I was satisfied with. I
suggested to him that he refund the other people to whom
he had already sold bootlegs, before THEY came after him.

The police in West Virginia caught the store clerk. They
set up surveillance at the vacant house next door, and
waited for more of his online purchases to arrive. After
the case was prosecuted, we got the jewelry back. All we
lost was a few dollars in shipping charges.

If you’re in business, you’re a potential target. Protect
yourself as best you can. Use an AVS system when you accept
credit cards. Confirm large-dollar purchases before processing
them. When people charge thousands of dollars to buy
large-ticket items from my sites, I always contact that
customer to verify the purchase. I caught two stolen cards
that way, BEFORE I got burned. Watch for multiple purchases
of the same item by the same person. They’ll end up being
re-sold out of the trunk of a car, and you’ll be stuck paying
the REAL card owner back. Be aware of protection programs
like EBay’s Safe Harbor. And if you think you’re being
ripped off, don’t just wait around to hear from someone
about it. Contact the bank that issued the card, and the
police in the area you think the perpetrator purchased
from. They take credit card fraud very seriously.

Who knows? Maybe someday, someone will write a news story
about it.

Chris Malta and Robin Cowie of are the Writers and Hosts of The Entrepreneur Magazine EBiz and Product Sourcing Radio Shows. Click Here for more FREE eBiz info from Entrepreneur Magazine Radio!

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