Fake sign-ups are a constant annoyance for web hosting businesses. If you are just starting out in this industry, you likely don’t have a sales team to thwart fraudsters.
If you have simple plans in place, you can go months without chargebacks. Follow these easy steps to prevent an enormous loss of money.
Protect Yourself in Your Terms of Service – When a customer signs on the dotted line for your services, make sure they are agreeing to your Terms of Service. If they break this bond via abusing servers, bouncing checks, etc, they forfeit their rights and you send them packing.
HostDime’s Terms of Service reads:
The Effective Date of an individual Service, is the date we begin the Ordering Process (Service Term). We use fraud detection programs. If during the Ordering Process your order is flagged as potentially fraudulent, it may not be processed. Until we notify you that the Service is available, you should not assume that your order has been processed.
Use a Fraud Verification Service – Hostdime uses Maxmind as our fraud verification. FraudRecord is another well-reviewed service; both don’t return many false positives.
Features of the MaxMind Service:
- The risk score: the likelihood that a transaction is fraudulent
- Geographical IP address location checking
- Proxy detection
- Device tracking
- Bank Identification Number (BIN) to country matching
- Prepaid and gift card identification
- Post query analysis
In HostDime’s case, our system generates these fraud check results anytime someone places a new order. As you can see, these and many other factors go into the “risk score”. After looking at the score, along with other potential red flags, we will determine if we should ask for further verification of the payment.
An Order has been Marked as Fraud. What Now?
If your new client has a high fraud score, there’s a few verification methods to try. Perhaps ask for a credit card or Paypal authorization form before accepting the order. Many fraud verification services also include automated phone or text verification.
When Should You Ask For I.D.?
If a client passes all tests, and you are still unsure for some reason, request a copy of their passport or driver’s license I.D. Make sure you right click the image and search through Google Images to make sure this isn’t a forgery.
Ask for I.D. if:
- IP address location doesn’t match billing address.
- The order is international and expensive.
- The domain or email consists of suspicious terms.
Lastly, use common sense. If a person is buying a few thousand dollars worth of servers or services, make sure this person is legit. While refusing a customer could mean lost business, that’s better than being scammed.
Fellow web hosts and resellers, we would like to know your thoughts. What methods do you use that differ from ours?
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Jared Smith is HostDime’s Content Strategist. If you are not a fraudster, follow him on Twitter.
Very Helpful.