

Beware Discount Steam Keys - elisee
http://unknownworlds.com/blog/beware-shady-key-resellers-and-discount-steam-keys/

======
elisee
Submission title was changed from "Unknown Worlds faced with $30.000 in
chargeback fees from fraudulent purchases" to "Beware Discount Steam Keys".

I thought it was interesting for Hacker News people to discuss it based on the
merchant angle, not from the point of view of a consumer choosing to buy from
a shady discount website, that's why I submitted it with such a title. I think
the title change makes the submission that bit less valuable/tailored to the
community.

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ryguytilidie
Where do credit card companies NOT make money? The businesses who use them pay
a fee on each transaction. Their cardholders pay them interest on the balance
of their account and apparently businesses are charged for fraudulent charges,
even though it was the credit card company that authorized said charges. How
is no one fixing this industry?

~~~
niggler
"How is no one fixing this industry?"

You can, and many people do, live a no-credit-card lifestyle. Need something
from an online store? Amazon and other retailers offer store accounts with
direct billing (search for "Amazon.com Store Card") and more favorable terms.

If you find the practice shady, you as a customer can choose not to use a
credit card. Use a debit card, or just pay cash. The problem is that customers
like credit cards: it lets you buy stuff now!

~~~
cma
Until the consumer banking stuff passed under Obama you really had no choice
but to participate. Card companies enforced merchant agreements which wouldn't
let merchants charge people less for not using a card (though some states
banned such agreements prior to the federal change).

Merchants would lose business if they didn't accept cards, and card companies
were basically able to squeeze them until such loss of business was barely
more painful than just going through with it.

A slight market correction came in the form of competition between card
companies to give cash-back deals. This essentially rebated some of the fee
back to the consumer (if an Ayn Rand nutjob saw a government bureaucratic
scheme half as complex they would explode with anger).

People with cash couldn't opt out; they still had to pay the same as card
users, but now those merchant agreements have been restricted by law.

~~~
twoodfin
Cash discounts have _always_ been allowed by most/all merchant agreements.
Dodd-Frank forced merchant agreements to allow minimum purchase requirements
(boo!) and to allow discounts for other forms of payment (e.g. debit cards)
and not only cash.

~~~
cma
>most/all merchant agreements.

Typically only in states that had their own law enforcing that restriction on
merchant agreements.

------
crazygringo
Can someone who understands how chargebacks work please explain:

1) If this such an obvious case of massive fraud, isn't there any kind of
protection for the seller? If they provide proof that the product keys were
delivered to the customers, how can customers still arbitrarily have their
requested chargebacks accepted?

2) Are chargeback fees always on the order of $22? That seems unbelievably
high. Is this just a way that credit card operators take advantage of
businesses, because they don't have much other choice?

I totally understand penalizing businesses for excessive chargeback levels,
when it's "widespread" and due to the business's own products.

But I don't understand why credit card companies aren't going to work _with_
businesses in case of chargeback fraud, instead of working against them. Do
they really have so much monopoly power that they have no incentive to?

~~~
Negitivefrags
I work on an online game also.

In the case of virtual goods, you will never have a chargeback side with the
seller. Never. You are at the complete mercy of every customer. All you can do
is ban the account after there has been a chargeback.

We get reasons like "I need to pay my rent so I want the money back" or "I
played the game for a few days and I don't want to play anymore". You can
supply email evidence like that as part of the chargeback claim. You will
still be decided against.

For virtual goods, the credit card system is just broken.

Chargeback fees tend to be around $15, but you also lose the cost of the
purchase.

~~~
gamblor956
If you can provide evidence that the charge was legitimate, the CC processor
will undo the reversal of the charge (which means the charge will be placed
back on the customer's bill). YMMV outside of the US, but the CC processors
have lost enough court cases in the US on this point to settle the issue.

~~~
elisee
At least PayPal doesn't cover digital purchases at all for sellers.

It would basically be your word against the credit card holder anyway since
there is no physical proof so I can understand why they can't. Anyone could
make up some proof. The root problem is with the banks: it's their system that
is being used fraudulently and they should be the ones paying for it so that
they have an incentive to improve it.

~~~
gamblor956
Paypal _does_ cover digital purchases for US sellers. I know this for a fact
because I have used Paypal as a merchant of digital goods and been in this
situation. Paypal's service was exemplary; I simply provided a receipt of the
transaction, the customer's IP address, and logs showing that the same IP
address downloaded the software. Paypal never charged back the transaction and
handled the dispute for me with the customer's bank. If the customer's bank
refused to undo the chargeback, then Paypal swalled the loss on my behalf.

 _Anyone could make up some proof._

Well, yes. But people generally don't go through the trouble of making up
proof for relatively small transactions (<$100, from the merchant's
perspective). It's simply not worth the time and effort to fake up proof for
something less than a $100 unless the work would take a minute or two more
than simply collecting the evidence supporting the transaction.

~~~
Negitivefrags
This hasn't been my experience with PayPal, or with any other provider. We
legitimately try and provide that kind of evidence.

For PayPal the user has to supply a chargeback reason. We had a user type in
"I need money to pay my rent". That was the exact text. The customer has
admitted fault, but paypal _still_ decides against us.

Edit: We have a US company and paypal account so it isn't that.

------
ge0rg
It is a real pity banks are externalizing the fraud risk to merchants, who are
not in the position to improve security in a meaningful way.

This can really be only possible in a monopolistic environment...

