Fraud Risks

• Card-Not-Present Fraud
  • Higher risk due to absence of physical card verification.
• Identity Theft
  • Use of stolen personal information to make purchases.
• Chargeback Fraud
  • Customers disputing legitimate charges to avoid payment.
• Friendly Fraud
  • Claims of unauthorized transactions or non-receipt despite successful delivery.
• Account Takeover
  • Unauthorized access to customer accounts for fraudulent purchases.

Regulatory Challenges

• PCI DSS Compliance
  • Ensuring secure handling of payment card data.
• Digital Rights Management (DRM)
  • Compliance with laws protecting intellectual property.
• Consumer Protection Laws
  • Adherence to regulations on refunds, cancellations, and disclosures.
• Data Protection Laws
  • Compliance with GDPR, CCPA, and other privacy regulations.
• Tax Compliance
  • Accurate collection and remittance of sales taxes, including VAT for international sales.

Chargeback Triggers

• Unauthorized Transactions
  • Charges not recognized by the cardholder.
• Non-Receipt of Goods
  • Claims that digital goods were not delivered or accessible.
• Billing Errors
  • Incorrect charges or duplicate transactions.
• Technical Issues
  • Problems with downloads or streaming leading to disputes.
• Subscription Cancellations
  • Failure to cancel recurring payments as requested.

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High-Value Purchases from New Accounts

• Significant transactions without prior history.

Multiple Transactions in Quick Succession

• Rapid purchases using the same or different payment methods.

Mismatch in Account and Payment Information

• Discrepancies between user profile details and payment data.

Use of VPNs or Proxy Servers

• Masking location to bypass regional restrictions.

Unusual Purchasing Patterns

• Bulk purchases of content not typical for a single user.

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Business Verification

• Confirm the legitimacy of the digital goods being sold.
• Verify business registration and ownership details.
• Check compliance with digital content licensing agreements.

Financial Assessment

• Review financial statements for revenue stability and growth trends.
• Analyze average transaction amounts and processing volumes.
• Assess the proportion of recurring versus one-time transactions.

Risk Evaluation

• Examine historical chargeback ratios and common dispute reasons.
• Evaluate fraud prevention measures and security protocols.
• Review customer authentication processes and account security features.

Policy Review

• Ensure clear terms of service, refund, and cancellation policies are in place.
• Verify that policies are easily accessible and communicated to customers.
• Evaluate compliance with data protection and privacy regulations.

Technology Assessment

• Confirm the use of secure, up-to-date payment gateways.
• Ensure encryption and tokenization are implemented for data security.
• Verify regular updates and maintenance of the platform's security features.

Reputation Analysis

• Check online reviews and customer feedback on platforms like Trustpilot.
• Investigate any history of legal issues or regulatory violations.
• Assess customer satisfaction and responsiveness to complaints.

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• Sudden Surge in Chargebacks
  • May indicate a security breach or ineffective fraud controls.
• High Number of Refund Requests
  • Could suggest dissatisfaction with content quality or unauthorized purchases.
• Multiple Accounts Linked to a Single Payment Method
  • Potential sign of fraudulent activity or account farming.
• Frequent Transactions from High-Risk Countries
  • Increased risk of fraud from regions known for cybercrime.
• Customer Complaints About Non-Delivery
  • Possible technical issues affecting content access.

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Business Model

• What types of digital goods do you offer?
• Do you operate globally or focus on specific regions?
• How do you source your digital content (own production, licensing, partnerships)?

Payment Processing Methods

• What payment options are available to customers?
• What percentage of transactions are one-time purchases versus subscriptions?
• How do you handle international payments and currency conversions?

Fraud Prevention Measures

• What security protocols are in place to prevent unauthorized transactions?
• Do you use any fraud detection tools or services?
• How do you verify customer identities and secure accounts?

Policies and Procedures

• What is your policy on refunds, cancellations, and chargebacks?
• How do you communicate policy changes to customers?
• Are your terms and conditions compliant with relevant laws?

Regulatory Compliance

• Are you PCI DSS compliant?
• How do you ensure adherence to data protection regulations?
• Do you have measures in place for tax compliance, including international taxes?

Customer Support

• What channels are available for customer assistance?
• What is your average response time for resolving issues?
• How do you handle technical problems affecting content delivery?

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Transaction Monitoring

• Implement real-time alerts for suspicious activities.
• Regularly analyze transaction data for anomalies or fraud patterns.
• Monitor high-risk transactions, such as large purchases or multiple failed attempts.

Compliance Checks

• Maintain up-to-date PCI DSS compliance certifications.
• Stay informed about changes in digital content regulations and adjust practices accordingly.
• Conduct periodic audits of data protection and privacy measures.

Security Updates

• Keep all systems and software updated with the latest security patches.
• Implement advanced security features like two-factor authentication.
• Regularly test the platform for vulnerabilities through security assessments.

Customer Feedback Analysis

• Monitor reviews and social media for customer satisfaction indicators.
• Address negative feedback promptly to improve service quality.
• Use feedback to identify potential operational improvements.

Chargeback Management

• Analyze chargeback trends to identify root causes.
• Enhance communication with customers to prevent disputes.
• Develop clear documentation to contest illegitimate chargebacks effectively.

Merchant Communication

• Maintain open lines of communication regarding business changes.
• Provide resources and training on fraud prevention and compliance.
• Encourage reporting of any suspicious activities or security concerns.

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