Running a business is full of opportunities and risks. Online marketing and selling of services and intangible goods such as coding, tuition, translation, copywriting, design, travel and accommodation is growing significantly and offers a big opportunity for Asian freelancers and small businesses.
As business models and technology evolve, so do the risks involved in running a business. And doing business online now also has its own unique risks. It’s inevitable that every online retailer will, at some point, be faced with fraud, and will need to know how to manage it.
When selling services or other intangibles there are two primary ways which you as a seller can be exposed to buyer fraud, and you should be aware of these as you develop your online business.
1.”I did not buy anything”
You’ve received a payment for a service rendered, such as copywriting, coding a website or a ticket to an event. After you’ve delivered the item or service, the owner of the credit card, PayPal account or otherwise, claims that he or she didn’t authorize the purchase and payment. More often than not, the underlying reality is that the payment details have been copied and used by a third party.
2. “I did not receive the item”
A buyer made a purchase for your service (e.g. an event ticket). You’ve sent the item to them in their name. However, the buyer put up a claim for not receiving the event ticket. This could be due to online fraud by the holder of the account or a third party who has stolen the account and instructed the seller to deliver the item to another address.
Ways to minimize online fraud
There are a number of things you can do to minimize the risk of fraud.
- On PayPal Headstart, we’ve previously stressed the importance of adhering to the Payment Card Industry security standards (PCI). If you’re looking to accept credit or debit card payments, you need to be PCI compliant to ensure your customers’ information is protected and to minimize fraud.
- Ensure documentation of delivery to the customer. This could be documentation of emails sent to the purchaser, in which the services were delivered (an e-ticket or attached document for example), exchanges of email that indicate services were delivered (some kind of email acknowledgement of receipt by the purchaser for example) or proof to show that the customer has accessed the services after the transaction date.
- Use PayPal. With PayPal, you’re protected against fraud for eligible transactions. PayPal has recently extended its Seller Protection policy for sales of non-physical items excluding digital goods such as services, travel and event tickets based on unauthorised transactions. This is to help merchants reduce the risk of fraud as they explore business opportunities. Read more.