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Alternative Payments For High-Dollar Transactions
About Michelle Rahm

If you own an e-commerce website, be aware of high tech thieves wanting to catch you off guard. Jewelry is a high-theft item and too often the excitement of a high dollar sale, especially on a new website, overshadows the importance of handling the transaction with caution. Internet crooks prey on small independent websites for this reason.

Taking precaution with high dollar transactions can help you maximize profits and minimize costly mistakes. Avoid accepting credit cards for high dollar Internet transactions. Cardholders can easily dispute credit card sales and as an Internet merchant you could be held 100% responsible for the purchase amount regardless of the situation. Consider these alternative payment options.

Wire Transfers vs. Funds Transfers

Bank wire transfers are gaining popularity because they are the safest way to guarantee funds from a sale. Sending a legitimate bank wire transfer requires the sender to visit the bank, verify account ownership and sign documents. The funds then transfer through the Federal Reserve Bank and are deposited into your account. Once the funds hit your account, they are available as cash.

Don’t confuse electronic funds transfers with bank wire transfers. While people worldwide prefer the cost-free convenience of electronic funds transfers to pay their bills, they are far less secure than wire transfers. Electronic funds transfers can be executed over the phone with the necessary bank account information. Unfortunately, thieves can use this less-secure system to their advantage.

My business once received an electronic funds transfer for $4,500 as payment for a diamond listed on our website. An email from the customer gave specific name, address and shipping instructions. I didn’t feel comfortable with the transaction because it wasn’t a bank wire transfer. I emailed the customer for proof of account ownership. Her reply was defensive, so I contacted my bank and requested they reverse the transaction. Sure enough, our “customer” was really a cyber crook transferring money from someone else’ account. Had I not been so cautious, I would have lost the diamond and the $4,500.

Two years later I received a call from the FBI requesting details about the transaction. Unfortunately, I had already discarded the email containing the pertinent information. I missed my opportunity to help put this repeat offender behind bars. We now keep an active “fraud” file to store any potentially valuable information.

Checks & Money Orders

Checks and money orders are less secure than wire transfers but can be more secure than credit cards. If you don’t have a guaranteed electronic check verification system, it’s important to take extreme caution when accepting personal checks, money orders or cashier’s checks.

First, verify the validity of the account and availability of funds by contacting the issuing bank. You can look up a bank by its routing number at: http://www.fedwiredirectory.frb.org/search.cfm (the routing number is a 9-digit number across the bottom of the check). Even if the account is valid and the funds are available, the check still may be fraudulent, so proceed with caution.

We once received a corporate check drawn on a US bank in the amount of $17,000. I called the bank to verify the funds. The account was so huge it had its own manager. I spoke with the account manager who assured me the funds were available. I told him I was suspicious because the merchandise was to be shipped to South Africa. Apparently, this wasn’t suspicious to him. I still didn’t feel comfortable, so I asked him to personally look at the check and tell me if it was good. He agreed. I faxed a copy of the check and he assured me the signature was valid and the check was good. What a nice surprise! We shipped the merchandise to South Africa. Eight weeks later I received a call from the company accountant telling me the check was forged. I explained the precautions I took with the bank. I faxed phone records proving I had spoken with his account manager who assured me the check was good. Because I was so careful, the bank had to absorb the loss!

I have since learned of an easier, safer way to cash large checks. Sending a check for Domestic Collection usually requires a small fee, but all banks offer the service and it protects against chargebacks. With Domestic Collection service, the check is processed manually. It is given priority for paying over regular checks and the bank sends a cashier’s check back as payment for the original check. The cashier’s check is as good as cash!

Money orders and cashier’s checks were once considered safe means of accepting payment. However, today the number of counterfeit money orders and cashier’s checks in circulation seems to be growing. Take time to validate these as carefully as any other check.

Valid money orders and cashier’s checks often include a verification number as well as the name of the issuing financial institution. If this information is lacking, look for the bank’s routing number and use it to look up the information at: http://www.fedwiredirectory.frb.org/search.cfm Contact the issuing bank to verify the validity of the cashier’s check or money order. As an added precaution, you may want to wait a full two weeks after depositing a check or money order before you ship any merchandise.

If you’re suspicious about a check or money order you receive and you are having trouble verifying its validity, check the Alerts & Counterfeits section at Bankersonline.com (http://www.bankersonline.com/security/alertchart.html). This is a quick Reference Guide to missing, stolen, fictitious and altered official checks, cashier’s checks, money orders. You can also report any fraudulent activity to alert@fdic.gov.

While e-commerce can certainly provide an additional income stream for your business, approaching high dollar Internet sales with prudence can help make your Internet experience a positive one. Take time to carefully verify all forms of payment and whenever practical, request a wire transfer payment for large Internet transactions.


To read other articles written by Michelle Rahm or to learn how to feature this article on your website, please visit http://www.jewelryimpressions.com/articles.html

Michelle Rahm of JewelryImpressions.com is a recognized expert in online fraud prevention. Rahm has spoken to a number of groups, written articles and been an interview subject for a number of leading trade, Internet and media outlets. Contact her at (970) 535-4139.

Contact Michelle at 970-535-4139 to speak at your next event.

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