| How Serious is Online Fraud? |
Every day you hear about some purported online scam which is
supposedly ripping thousands off innocent buyers. There are
whole sites set up to inform and report on these matters,
which is great, but it tends to paint a one-sided picture.
Without wishing to sound unsympathetic, in a very large
majority of cases, it is because buyers fail to see warning
signs (like lack of contact information on the sites they
purchased from), didn't check them out to see if they were
members of agencies that could verify their integrity, or
simply because they wanted to believe the impossible, i.e.
that they'd get rich overnight for a $29.95 "investment".
Identity theft and major fraud get plenty of press, but
what seldom makes the headlines is the amount of petty
fraud perpetrated by the general public upon small online
merchants. Particularly in respect to instantly downloadable
digital goods: i.e. software, eBooks, etc.
Fraud committed by your visitors is a far more prevalent
problem than you might imagine and, I believe the simple
reason for this is that it's far too easy to carry out.
Oh, forgive me if I don't explain EXACTLY how! :-)
On the one hand, merchants & website owners don't concern
themselves with the details and pretty much put their heads
in the sand. Maybe they even imagine that security products;
scripts, information, etc., are just another way of trying
to squeeze a buck out of them, by using scare tactics to
pretend to solve a problem they don't know they've got.
Well, too right, they don't know they've got the problem if
they aren't tracking or doing something to protect their
sites and downloads ... that would show up where thefts are
being made. If they were, they'd know that this is a very
real problem that is growing at an alarming rate.
Someone who wouldn't dare steal from a traditional store,
but who understands the very basics of HTML can, and will,
take the goodies and run. They wouldn't have the guts to do
so face to face, but they imagine they can get away with it,
with the anonymity they think they have online.
It isn't quite that simple to be invisible. If you capture
the IP address and the exact time of any fraudulent access,
the amateur perp can often be caught. A quick note to their
ISP -- who will know which of their customers were attached
to that IP address at that time -- will ferret them out.
Just to see for myself, I recently carried out an experiment
using a low-ticket item. Normal payment links were in place
and I set up some rudimentary tracking that would let me see
where the payment process was bypassed, but I deliberately
didn't implement any special security to prevent it.
I sent out my advertising and certainly didn't have to
wait long for *takers* -- in all senses of the word.
Almost the moment my solo ad hit my subscribers' inboxes,
emails for payment receipt transactions and notifications
that the product had been downloaded began to arrive.
And the numbers didn't match!
It was a small sample, but one in five, 20% had downloaded
without paying. No, I can't say if this percentage would
translate to a larger sample, because, quite frankly, I'd
rather not find out thanks, but clearly it does go on.
Whatever the percentage, it's serious enough and taking some
measures to prevent fraud will increase your profit by at
least that amount. Every percentage point helps these days.
If the ticket price and volume are sufficient, this could be
a very significant slice of your profit that's currently
leaking right out of your hands. And I know whose hands
I'd rather have it in, if it were mine!
Copyright © 2004 Pamela Heywood
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