[uberduber]

Used to work in a business that sold porn DVDs and had to deal with chargebacks. We had an inbound sales call center, and a customer service one where you could cancel.

Among the chargebacks, fraud is the most common reason code, but the amount of true fraud such as stolen credit cards is astoundingly low to the point of being almost non-existent. I would say 90% of cases were the angry spouse and the man denying it. The most common actual fraud you would see is a relative who lives in the house using it, say a grandson using grandma's credit card or adult children running up a $4k tab after their parent died.

Also I had to find friendly merchant banks, the problem with this is it is very much a two-way trust street. Just as there are tons of shady porn providers, there are tons of shady merchant banks. Some will hold your money for no reason and can jeopardize your whole business, so we always had everything spread across multiple banks but that could still be problematic.

[patrec]

So what happens with those angry spouse chargebacks? You just eat the loss if that happens (and ban the customer)?

[uberduber]

We eat the loss and the chargeback fee, it's just a cost of business.

It's not worth it to ban the customer. 90% of them don't buy again. Of the 10% that do, it's worth it to keep their business and risk the chargebacks. Most of them get better at hiding the porn. Also if we did this we would end up banning great customers who closed their card due to actual fraud and the bank just ending charging back everything after a certain date.

There just weren't really that many trying to scam us out of DVDs. Other business factors affect your chargeback rate way more than these customers.