I think the tools are already here, so we can all adapt, but it will cost somewhere... Let it be the number of signups, or the overall income per signup.

I wonder what VISA are thinking about doing on these dates:

April 2004
October 2004
April 2005
October 2005
etc.

I guess if they are not making new rules, then they do not think they are working. :(

Thanks, Todd... :D

I created a monster several months back and now I have to compete with him in the market, too...

You know who you are, bitch! :hic:

Jim,

I hate those alter ego's :P

well now at least you have an email link in there :)

VbV is pretty much dead for our business JR, unless Visa jumps in and changes their mind. I guess they dont want to give us any options to protect ourselves, but hell I don't really know what they are thinking anyway.

Unless... the rationale for this tightening of the belt buckle yet again is somehow related to the fact that since Visa's overall cb ratio has been and continues to drop, they feel that they can bring each segment of their market further towards zero percent chargebacks? If so I certainly applaud their ability to bring the cb ratio down overall but I still don't understand what they are thinking if they are treating every piece of the puzzle as if it were the same shape and size.

Anyway back to topic.

VbV should have meant that the initial transaction was cb proof, even though the recurrings probably wouldn't have been.

I think one of the reasons that Visa has stepped back and refused to allow high risk to make use of VbV is the way that it is being marketed by its member banks. I have looked over the B of A references to it online and you have to really dig to figure out that you are giving up your right to dispute a charge on the grounds of not being the one who made the charge. Took a page out of our book so to speak.

It's pretty amazing what kind of changes could be wrought from this little change in the rules if you think about it. I'd definitely say there are some issues with monopolies, Sherman, Clayton, restraint of trade, and so on.

But who's going to fight Visa? It would be a long and bloody expensive one, that's for sure.

That's a great idea. I'd love to push checks more but I can't seem to get people to choose it as an option. If we had a simple FAQ, something consise that wouldn't distract, I bet it would help.

Now with this 1% thing, I don't see how it's going to work at this stage in the industry. Forget about the people who raped the consumer... now the consumer is educated and the tables have turned.

We get charge backs where they'll charge back 4 to 6 months worth of transactions. Our logs prove they used the service but as you all know we don't stand a chance.

I really hope an alternate payment system becomes available really soon.

What a fucking joke about vbv ... wouldn't you think this would be MOST beneficial in a high risk market!?!?!?!

wtf is going on up there in visa la la land?!


paycom is going after mastercard - when they win they have a precedent to go after visa. :agrin: :okthumb:

I think it will be the same it has always been for chargebacks...you will have to continually go over the 1% to get dropped...they have to hand out warnings first.....I think 1% IS attainable if you do not run 100+ sites and cross sell your customers to them or try any slick moves to get them to buy more shit.....I did just over 1000 memberships last month(not a huge #)
and had 7 credits and ZERO chargebacks....

i think it can be done but the model is definitely changing again and the webmaster payout as we know it is going to be gone forever......

Heya CY... sorry, but my country ass goes to bed around 10pm.

Have been training the baby mule and not riding too much. As you know, Jill is pregnant (btw it's a boy), so she can't ride.

Liberty is coming along really good! You do not ride them until they are atleast two years old, so now is when you teach them the basics on the ground.

I'll put up some pics. She has grown alot!

If I swing past your way soon I will drop by & see for myself
I want to say i've ridden wig's mule ;-)))

How is Jill going? She must be sporting a nice bubble by now - can't wait for the next oprano birth!! :bjump:

cross sells chargeback LESS than normal memberships - that is NOT the issue.

My concern is this - anyone doing substantial volume has a HELLUVA time keeping their c/b's below 1% and if you aren't doing substantial volume its much easier to stay below 1%. With that said, if the 'big guys' fall then who do you think will get their volume? The smaller programs still under 1% ? Can those smaller programs pick up the tab for a huge influx in new sign ups? Can they increase their volume rapidly and then keep their c/b's below 1% down the road?

I find one very exciting possibility in all of this. This just may FORCE our model to change (something that has needed to happen for the last year). We need to find a different mouse trap. Selling masses of micro trials and doing everything legally possible to get those to convert so you can recover the huge $40 loss up front just isn't the way to do it anymore. And its the huge $39.99 price tag that hasn't helped the c/b issue in the first place.

We've been in a wicked spin downward for quite sometime and Visa with one simple little rule may be the one to force the correction of that spin and pull us back up! :)

So in the same sentence I say thank you Visa and kiss my ass haha

It's going to be a long and bloody fight against MC also.

IMHO, I don't see any resolution on the Paycom/MC suit for AT LEAST 2 years and maybe longer. That's an opinion based on lawsuits, not the CC world, so hopefully I'm wrong..... :(

What Marc said!

Very well spoken indeed!

That post is so good it bears repeating especially


Selling masses of micro trials and doing everything legally possible to get those to convert so you can recover the huge $40 loss up front just isn't the way to do it anymore. And its the huge $39.99 price tag that hasn't helped the c/b issue in the first place.


Just an odd thought that crossed my mind, beyond the "brand" protection Visa may be trying to preserve, can Visa be seeing the substancial fine MC has levied and be looking at another revenue stream? I know that's an odd thought but .......

Some other changes I think could happen with this new CB ratio threshold


PPS high end prices come down along with PPS program payout to affiliates, especially if Visa starts levying heavy fines

Significant affiliate programs move to "in-house" promotion and away from free site webmasters - which could drive many small-mid size free site operations out of business ...

or affiliate programs move to provide and control promotional materials and how they can be implemented

Some PPS affiliate programs may chose to walk away from the business or at the very least from the current model they are using

More % partnership affiliate programs and less PPS affiliate programs

Another resurgence in customer relations and service (if you're not doing it already which I hope most are)


Obviously now is the time to rethink your business strategies (including diversification into other payment options if you're not using them already) and have other options in place before October


Wow I have a Master's in the Obvious he he he

Vick - a big help would be a simple change that could happen today.

$35-40 / referral dropping to $30 FLAT! and the price going from $39.99 per month to $29.99 or $24.99

But that would be a short term fix. We have a payment method that isn't new but isn't use in premium content paysites yet. We've been working on it for a while and it will be ready soon. I think its the answer, but my competitive nature will keep that behind sealed lips (or restrained fingers).

Jill is doing great. She has not been sick once and at 4 1/2 months has got a little basketball working! :D

I sure hope you get a chance to visit someday. I definitely would like to get a picture of you on Jack!

hahahhaha
i dare you to write that on your ass Marc LOL

I totally agree with you ... this is the beginning of this business becoming legitimate and more professional ... all those idiots from the dot com days who invested capital in porn companies in the last 2 years should have waited until now.

I am more excited about the industry now than I have ever been - there is so much that can be done now that we are all being forced to abide by a set of rules.

this is why I don't believe being one of the 'big boys' is going to be enough this time ... imho the big companies are the biggest targets for these rules, and while smaller companies can hover under radars, its the big companies who get the attention.

however, 1 big company equals 20 medium companies, 50 small companies etc ... the effect on webmasters if small programs topple is very little, but if a major sponsor goes, the payout model will start to drop and the payout offers of the medium and smaller guys will start to look more attractive

i've made this point here before in more detail - 1% of a really high number is still a really high number - visa's % point is just pulled out of their ass - at the end of the day, if the NUMBER (not %) of chargebacks you are doing exceeds a certain amount you are gone.

I think this has been happening since early to mid last year ... i think we are going back to the beginning of the cycle to do it properly LOL not enough people went out of business, time to do another round of weeding!!

This is such an important point that you have made, and i don't think many of the 'medium' companies realize what happens when you get 1000 more signups per day than you budgeted for ... all is fine for about 3 months, chargebacks come in and its :bwave:

oh well, its been too easy up until now anyway
time for a real challenge
:biglaugh:

:bwave: :bwave: :bwave:

Now that guy rules - you are the weakest link :bwave:

Business is about change - staying in business is being flexible to go with the change. Talking about things outside of your influence is really a waste of breath. Worry about what you can influence, deal with the circumstances and adjust to stay competitive (and for some the more difficult task of STAYING IN BUSINESS).

Remember there is a positive to everything. Some people just can't wade through the negatives to see it.

I think Marc is right, there needs to be a business model change.

The "inflation" in this industry is what has helped drive us to this point. Programs had to keep increasing payouts to webmasters to keep them sending traffic, while at the same time had to make sure they made a profit. So they started banging surfers credit cards hard. Of course many
times the programs also shaved.

This inflation, has created a very unstable business model... one that VISA is about to slap down.

Maybe this will finally force the industry to reform somewhat I do not have much faith in the many cockholsters in this industry who have raped and pilaged in the past....

We have a program called Chargeback Combat. With this service we give, you don´t have to worry any more about having the chargebacks over the 1%.

There will always be some people/companies who are pushing the rules to their max, and then sometimes break them - this will also happende with the new VISA rules... so we will probably have even more strict rules in april 2004.

IMHO - If we as an industry could get the total % of VISA and Mastercard transactions down, and introduce more/new billing options, then I think we will stand much more strong next time VISA/Mastercard decied to change the rules. We have been keeping to much of our processing in the VISA/Mastercard basket - time to spread the risk, and make more money in the process :)

More info please
Is this a service, a program ect....
Do you guarantee it?
What type of guarantee?

Vick I was wondering the same thing. I went to the website, but its not that informative. Very generic, and non specific. ( which I can understand for a public website)

I too am curious what these people can do.

So puchih come back and talk....

This may be one of those times it is better to be a medium size program, rather than a big guy. I agree, doing 1000's of joins a day, impossible to stay under 1%. But it is almost possible if you manage your webmasters and traffic and find the right mix, on a small scale.

I would think the TYPE of site you have helps also. Some of the personal amateur sites and fetish sites seem have way above average retention and low chargebacks.

More info please
Is this a service, a program ect....
Do you guarantee it?
What type of guarantee?[/b][/quote]
Sorry to toot my own horn here, but AdultRep has been helping clients with
chargeback problems for some time now. None of our clients have ratios over
1% and if your paysite is operating ethically -- canceling accounts when
customers request it, disclosing that transactions are recurring, and making
cross-selling very obvious -- there is no reason for chargebacks to be above
1%.

We have clients that go some months with 0 chargebacks. These aren't tiny
sites either. Just last month, one of our 2000 member sites had 0
MasterCard chargebacks. Their Visa ratio was 0.5%. When our clients do get
chargebacks, we call the cardholders and ask them what the problem was.
Usually they just forgot about the charge and we convince them to drop the
chargeback.

One of our clients who had his own merchant account had a serious problem
scrubbing foreign transactions, so we put in a callback program and we
called every new foreign customer to see if they authorized the transaction
and if they knew the terms (monthly rebilling, etc). We have reps that
speak Spanish, Portuguese, and French, so we're covering much of the EU and
all of North and South America in the customers' native language, making it
very easy for us to deal with international customers.

Anyone who is committed to operating honestly really has nothing to fear
about these chargeback problems. I know our clients are sleeping easier at
night knowing that someone is handling their chargeback problems for them.
As long as you're not using any kind of shenanigans, AdultRep can make a big
dent in your chargeback ratio.

Let me know if I can help.

I don't see it, no. Someone who's able to do a few hundred, i.e. less than 500 joins a day without cross sells, especially if they've never done more, is not going to be able to manage 1000 a day any better, actually my money is on worse, than someone who's been managing 1000+ a day for at least a year.

That cycle will be a simple one -- someone ramps up, stays there for a couple months and boom! they're done and gone.

Just being a big guy won't get you through this one no -- but having been a big guy for some time will probably give you insight into the situation and thoughts of how to manage the business into longer term profitability.

ALL programs, tho, no matter how big or small, will be affected by this. Between the trickle down effect and a few other factors, no one is going to be immune, except maybe the little guy doing 10 joins a day on his own merchant account.

puchih that was a nice commercial, but we at Oprano want to know the real deal.

What kind of solutions do you have specificlly for the US? To help combat the VISA 1% issues? You use the phrase "for some time now" what is that months? years? Exactly how long?

How do you charge? Do you have a guarantee? What kind?

Do you have references? Anyone that is well known that we can talk to?

Marc, this is about the best advice possible ... not just for business, but for life.

Worrying about things you can't influence just clouds your head for dealing with the real issues. I went around in circles last year because of this, trying to do things I had no control over & not focusing on the things that are obvious to me.

There's nothing we can do about visa's rules, we can talk about it all we like but we know nobody in our business will stand up to them - we also know that people are going to buy porn no matter what - if we can't charge them with visa, they will pay with something else.


puchih, I too am curious about your service - awesome idea, and you picked a good time to drop by with a commercial ... I have a couple of questions in addition to mike's which I am also curious about.

how does this work with a 3rd party processor? do you have a relationshp with them where they will share the information of an attempted chargeback with you before they simply press the 'issue' button? can it only be used with a merchant account?


I wouldn't consider this to be that impressive, if the site only has 2000 members then its pretty easy to manage ... what about 5000 members, 10000 members, etc - do you have any experience with volume above 2000 members?

how much do you charge for your service?
what % of attempted chargebacks does your service eliminate? i would imagine its quite significant as it would scare the shit out of someone about to commit fraud - that part i am very curious about.

just saw this in the ibill news section of the cmi

i'm confused, KK, didn't you say they wouldn't be offering this service to our industry?

Yeah, I'd say that soon is relative to how long they've had that up there cj -- I've got two really good sources saying it's not going to happen, I think someone at IBill put that up there and then didn't realize it was still there...

The more I think about this, the more I think of this.

I've talked to a bunch of people, been doing some reading and research, and for me personally I don't mind this whole thing a bit, it opens up some new opportunities that would never have been cost effective to look at before now. For some of my acquaintances, friends and err, non-friends, it could get really sticky. Can't say I'd wish the worst on anyone but there will be many that get nailed in the crossfire.

There is a way to work this, I've no doubt of that.

As one of my very best friends said to me in some hilariously funny circumstances a few months ago...

don't overlook the obvious.

you mean ibill has out of date incorrect information on their site?!?! :zoinks:

never!!!! :zoinks:

LOL

i figured it was something like that but fuck, talk about confusing the already confused!

'dont overlook the obvious' ... so true ;-)

With the huge fines being levied for going over the CB/refund ratio,
what is the actual cost of a CB/refund?

How difficult would it be to set up within the US some sort of third party confirmation of name, address and phone number that agrees to the name of the card holder.

Maybe having an automated system where the subscriber has to dial a number to receive their password.

Before they are given the password they listen to a recorded message telling them their name and address has been entered into your system, and that any charge back relating to your services will be investigated,
and if found fraudulent will be prosecuted.

If one or two cases can be proven and documented will it make other people think about charge backs,
yep it's expensive to prosecute but so are the fines, if you can show it will happen, would it stop others from charging back so easily.

Mike & CJ,

I always give it straight. Ask me a fair question, I have fair answers. Let’s take your questions one by one.

For reducing US-based chargebacks, we start by looking for a positive AVS & CVV2 response. If you've received a Visa chargeback with reason code 461 or a MasterCard chargeback with reason code 537, that should be enough for the acquiring bank to re-present the chargeback to the issuing bank. Of course, some acquiring banks will not act on this information, but others will. Before we take on any client, we have them send a registered letter to their acquiring bank to get a formal copy of the chargeback re-presentment procedures. We adapt our process to fit the specific acquiring bank of our client.

We don't stop there, however. For banks that don't accept AVS/CVV2 as proof, we contact the customer directly and we ask them to drop the chargeback and obtain a refund directly from us, the merchant. This approach frequently works. Again, depending on the merchant bank, we get the customer to send us an e-mail with his driver's license number as confirmation or, if the bank won't take that as proof of a customer's intent to drop a chargeback, we send the customer a pre-filled auth form by mail that he needs to sign and return to us. Once we get that, we send it to the merchant bank.

If we fail to reverse the chargeback due to the customer being uncooperative, we proceed with collection activity to recover the amount chargedback plus the chargeback fee. We start with letters from our in-house collection agency and we progress to registered letters from an attorney's office. Hope this clears things up about our process for US-based chargebacks.

The company has been in business since April of 2002.

We usually charge a fixed price per active-recurring member per month. For the purpose of an example, let's say your site finishes up the month with 1000 active members and your price is $1.50 per member. Your cost for that month would be $1,500. Of course, $1.50 is just an example. The actual per-member price depends on the number of services you buy and a number of other factors. We don't have standard pricing and it really depends on what the client is looking for.

We do not have a guarantee for our Chargeback Combat service. We do guarantee a few of our other services. The reason for this is that the success rate is variable -- even if we used the exact same procedures for our clients. The reason for this is the acquiring banks and their chargeback re-presentment policies. If all banks offered a standard procedure for this, we could offer a guarantee.

Some of our clients have been nice enough to volunteer to speak with our potential customers. I won't abuse that by posting their contact info in the boards, however. For serious inquiries we do provide references.

Currently we are not working with any 3rd party processors. All our Chargeback Combat clients have their own merchant accounts. And no, we don't have any relationship with a third party processor to get their chargeback information. Since we have to be in direct contact with the merchant bank in order to reduce the chargebacks, we doubt any third party processors would allow us that kind of access, so we haven't asked them for it.

But if the reason people are holding off on a merchant account is due to a fear of chargebacks, I can assure you that they will be lower with the combination of Chargeback Combat plus a merchant account than they will with a third party processor. When our clients have a merchant account, we can really get active about fighting the chargebacks.

There is no difference at all between a site with 1000 members and a site with 100,000. The reason is that we approach each chargeback individually. When we're reversing a chargeback, the only thing that matters is the information that we have about that individual chargeback. Yes, we do have experience with sites over 2000 members. I was just using that as an example because we reversed every chargeback for that month. We were pretty proud about that. And remember, when you put all our clients together, collectivly, we're managing thousands upon thousands of members every month. So, even a site with 20,000 members is not a huge amount for us. :)

I covered pricing on Mike's question. If you want me to have a look at your situation and give you a quote, please let me know.

Again, it varries from client to client depending on the merchant bank. As long as we're working with a reasonable merchant bank that gives us clear guidelines on their chargeback policies and follows through on their guidelines (i.e. if they tell us they'll reverse a chargeback with a cardholder e-mail, they actually do it once we produce that), we can do a good job for clients. I feel as though we've done a good job for clients when we reduce thier current chargeback ratio anywhere between 35-55%. I don't think this is an unreasonable target to shoot for, as long as we're working with a good bank. And yes, we exceed this with some clients who are very serious about chargeback reduction and are willing to do whatever it takes, such as callbacks for all new sign-ups.

We get some surprised phone calls once we start sending out collection letters. A lot of people pay after they get the letter from the attorney's office. That scares some people. But really, our goal is not to scare people. We are very polite with people until they refuse to work with us. We go out of our way to explain how the customer didn't need to chargeback at all and they can just get their refund from us.

Quite a few people are perfectly willing to go this route and there's no reason for us to get nasty with them. We only get forceful with people when they won't do what we ask.


I hope this answers everyone's questions about Chargeback Combat. If there are others, feel free to contact me or post it here. If you have a question specific to your situation (i.e. pricing for your site) it would be better to contact me so we can discuss in-depth what we can do for you.

puchih, do you do anything with ACH?

puchih, thanks heap for those explanations, it helped a lot to understand the use of your service ...

the above point is the only one i'm not clear on ... the way i interpret this is that we pay you according to how many members we have, not how many of those members you actually have to work with ... it seems to me that this pricing is so that you can take a piece of my member base instead of just charging me for chargebacks and/or members that you actually have to deal with ...

am i interpreting that right?

Thanks for the replies. Wig & cj, let me address both of of your questions below:

Yes, we do, actually. We haven't done any "chargeback" type activity (i.e. customers who reverse a settled ACH transaction). What we are doing is going after customers for NSF transactions. In fact, we're very successful getting money from NSF transactions. Remember, in the United States it is a crime to bounce a check. I'm going to use you as an example wig...

Suppose you bounce a check with one of our clients. Our mission is now to recover the NSF fee for our client (usually about $3-4 depending on the processor) along with a little bonus. So, we do a little digging. By looking at your sign-up informtion and phone number, we will find out where you live. Let's say you live in Austin, Texas. I know that you're in Travis county. I also know that the county attorney for Travis county is David Escamilla. Our in-house collection agency has a copy of the NSF laws for every state, so I know that in the state of Texas, failure to pay me on an NSF check within 10 days after notice by certified mail is prima facie evidence of intent to defraud, which makes passing the NSF a misdemeanor crime under Sections 31.03, 32.41, and 132.9022.

I will then send a registered letter to the address I have on file for you stating what I just said above. I'll also be calling you just to make sure you know. My letter will state that if you don't pay me within 10 days, I will turn over all evidence of the NSF transaction for prosecution under Texas law to the office of:

The Honorable David Escamilla
314 W. 11th St., #300
Austin, TX 78701
Phone: (512) 854-9415
Fax: (512) 854-9316

Imagine for a minute you got a letter to that effect in the mail -- with a notice that the NSF would be turned over to your local county attorney. Would you pay? I bet you would. Most of our clients' NSF customers pay also -- they get back whatever the amount of the transaction was, plus a $20 NSF fee that we ask for. Usually their ACH provider is charging them way less than $20 for an NSF item, so they're making some money here.

Just like with chargebacks, we give them a polite e-mail first asking them to mail in payment. We never get nasty until the customers stop doing what we ask. Hope this clears things up with regards to ACH.

Not exactly. If you were just to purchase the Chargeback Combat service, I'd either charge you a flat rate per chargeback we handle or give you a flat fee for a range (say... between 100-150 chargebacks per month). However, most of our clients (well over 90%) choose to buy our other services as well.

When we do anti-attrition work and customer care work for sites, we typically come into contact with 25% of a site's member-base in any given month. That may sound high to you, but think about how many declined transactions there are -- we're calling all those people asking for a new card number. Imagine you had a live chat button on your site, avaliable for members to use at any time they want, to ask whatever they want. They make good use of that. The vast majority of our customer care reps are female, so we have some customers who just call every week to have someone to talk to. We're always very polite with people and if they want to talk to a girl on the phone for 10 minutes, we're not going to hang up on them -- as long as it keeps customers with your site longer.

When you add everything up, on a 5000 member site, we can come into contact with 1300 customers in the month via e-mail, online chat, by phone, by mail, etc. Sometimes we have to call or e-mail a customer 3 or 4 times just to get a response. It would be extremly burdensome for us to bill based on a per-contact scenario. Can you imagine getting a bill in the mail with 4000 line items with different prices depending on the contact method, whether we made contact with the customer, how long we talked with him, etc.

We find a member-based bill to be fair for all concerned. The amount of work we do increases or decreases as the member-base to the site increases or decreases, so we find that it is a good way to approach things. As a side note, we do log every e-mail, phone call, chat session, chargeback, etc. So, we have records of all incoming/outgoing contacts that we make. Our reports to clients summarize everything we've done for them for the month.

Thanks again for the questions. Let me know if there are any more. Have a good 4th!

Thanks for the reply. WTS actually does all this currently for our Merchants.

Perhaps there is a strategic alliance opportunity for us in another area. Will you be in Florida?

I wonder why a cooperative in the adult biz hasn't got together and created their own credit card. It surely needs doing now before Visa/MC become totally unusable due to unrealistic terms. Make the card Internet only - get all the paysites you can to accept it as a payment option - try to get as many non-adult as possible too to increase take-up.

It could start as a debit card whereby all payments are ACH'd straight away from the users' bank account - any defaults and the card is suspended until payment is received. Good paying customers start to get offered credit once you have assessed their riskworthiness. They maybe only get ACH'd once they have built up $100 or $200 or $500 - or maybe just once per month.

The most you can lose initially is a little bandwidth before the card is suspended. ACH processors are plentiful so you can easily have that side set up. All you need is a bullet proof internet site to handle all of this.

Give it 5 years and maybe you can give MC/Visa the finger! :)

Frankie