Shareware Beach

Thursday, 14 June 2007

Silly Anti-Fraud Policies Cost Business

Filed under: Marketing — Jan @ 16:55

Last week my wife said she wanted a Sudoku game for her new Pocket PC. So I went to Handango, downloaded a few that seemed nice, picked the one that looked best, and clicked through on Handango’s site to order via PayPal. I got this:

This recipient does not accept payments from non-U.S. PayPal accounts

I don’t know why Handango won’t take my money, but I can only assume it’s some misguided anti-fraud policy. It’s not like they don’t sell abroad at all, because the credit card payment option on their site lists all those countries you’ve never heard of.

For a business that also accepts credit cards directly, nearly all PayPal fraud will come from accounts of phishing victims. That’s certainly my experience. In case of software downloads, it doesn’t matter to the thief which country the PayPal account is in. To defraud Handango, he just needs to hold on to his phishing line a little longer until an American fish bites.

A quick tally of Just Great Software’s PayPal orders shows that in 18 months, we’ve had 26 fraudulent orders through PayPal. That’s certainly not enough to worry about. 23 of those were with U.S. accounts. Blocking U.S. accounts and allowing foreign accounts would be more efficient at stopping fraud. If you say that it would also stop a lot of orders (but not all, as there’s the direct credit card alternative), that’s exactly what blocking foreign orders does too. Non-U.S. fraudsters are smart enough to use U.S. proxy servers and what not to evade your anti-fraud checks. But honest customers usually don’t want to or simply can’t go through such trouble. (There’s no way I can have a U.S. PayPal account.)

So what did I do? I paid with PayPal. Directly to the developer. I didn’t want to use a credit card because I have dollars in my PayPal account, but I don’t have a credit card billed in dollars. Saves me on currency conversion. It hardly matters for a $14.95 game. And, frankly, it’s quite offensive to be classified as a foreigner, even if I am. I work hard and pay my bills on time just like every average American.

In the end, wife’s happy, I’m happy, developer’s happy, and Handango sends me an automated email wondering why I didn’t pay. Duh!

Unless your fraud rate exceeds your profit margin, indiscriminately blocking orders costs you money.

1 Comment

  1. That sounds silly. Handango seem to put so many silly rules on like that, that just makes it harder for customers to buy! When i got annoyed at handango one time i had a quick search and found a great site – Exactly the same idea as Handango just miles better. Unlike Handango there’s no rubbish on there, so you know you’re getting a quality game – i believe the site is moderated so developers cant upload rubbish that might trick customers. Also download protection is free – i was shocked handango gets away with charging $3! Why should you have to pay for that? If the company doesnt have faith in their service how can a customer?!

    Comment by SpyderSleuth — Friday, 6 July 2007 @ 19:25

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