Suspected fraud – what to do?

Fraud attempts ​by end customers occur very rarely: far less than one percent of all transactions carried out via Digistore24 have occurred from proven fraudulent intent.
​For this reason, the probability that you will ever become a victim of fraud is extremely low. If you think you are the subject of fraud, ​this article will tell you what you can do and how Digistore24 will protect you.

Please report all fraud attempts.

Even if less than 1% turn out to be attempted fraud, please carefully evaluate your suspicion of a fraud attempt. If you still think it may be fraud, simply report the case using the “Report fraud” function. This will help prevent further potential fraud attempts and make our platform even safer.

What is fraud?

​In the context of payment processing, fraud is a deliberate deception of the contractual partner (i.e. Digistore24) or the vendor that results in a loss of money.

​Examples of fraud on Digistore24 could be:

  • ​A customer intentionally gives false payment details, meaning that the amount cannot be debited.
  • ​A customer intentionally carries out a ​chargeback at the end of the return period.
  • ​A customer falsifies information in order to convince a vendor to give a (partial) refund.
  • ​A customer pretends to be an affiliate so they don't have to pay as much.

​How does Digistore24 protect me against fraud?

​Fraud detection software

​Our fraud detection software works in the background and checks all purchases against some of the parameters we set. The software is primarily designed for large-scale fraud attempts.

The software works on the basis of aggregated data that we have been collecting since 2012. This wealth of information at our disposal means our fraud detection software is already very advanced.​

​Credit reports

Digistore24 works with creditPass to protect you from potential payment defaults. This protection is included in the Digistore24 margin.

Before a payment is made, a central database checks whether the customer has attracted negative attention in their bank transactions.
​This database is linked to Schufa and various other financial institutions: If the customer is flagged on their systems, the payment is rejected in order to protect you from possible chargeback fees.

​In order to prevent access to the product in the case of a payment failure, Digistore24 has an API interface which the system uses to communicate with the member software.​
​You can access the interface here: https://www.digistore24.com/extern/test/ipn.

​Blacklist

Digistore24 has a blacklist on which we record individuals (and their data) who are no longer wanted as customers by us. These individuals will be excluded from further purchases on Digistore24.

In order for a customer to be blocked for all purchases on Digistore24, a Digistore24 employee must verify this or the customer must be detected by our fraud detection software. Alternatively, you can also prevent customers from purchasing your products at any time by ​​blocking an email address or part of an email address - you don't even have to state your reason for doing so!

How do I report fraud?

First of all, you should make sure that it is actually attempted fraud. In most cases, there has been a misunderstanding or a mistake made by the customer. For example, ​an average of ~90% of chargebacks for first-class products turn out not to be cases of fraud and are withdrawn later on.

​If you think that your customer or affiliate has acted in a fraudulent manner, you can report the fraud. This will have the following consequences:

  • ​The customer cannot buy any further products from you.
  • ​Following approval from Digistore24, the customer is blocked from purchasing all products via Digistore24.
  • ​Digistore24 considers legal action against the customer if there has been a blatant attempt at fraud.

​To report a ​transaction as fraud​, proceed as follows:

  1. ​In the vendor view, go to ​Account > Transactions.
  2. ​Click on the flag symbol "Report fraud" next to the suspicious transaction.
  3. ​Give the reason why you think the transaction is suspicious.
  4. Choose whether you want to accuse only the customer, or both the customer and the affiliate of fraud.​
  5. ​The email address is now added to your ​​blacklist, the customer is blocked from using your products and the reason you stated is sent to Digistore24 for further review.

​Manually add email addresses to the blacklist

Step-by-step guide

​How do I proceed with outstanding payments/chargebacks?

​As has already been mentioned, in the most cases there is a misunderstanding or error on the part of the customer and no actual attempt at fraud.
​For example: If you receive a chargeback, the reason in most cases is a faulty account connection or insufficient funds in the customer's account.

Nevertheless, ​​chargebacks are especially annoying since they incur costs for you. If an end customer carries out a chargeback (whether intentionally or not), a fee is due which the recipient bank has to pay, which usually falls back on you (more information about this can be found ​here).

​Given the fact that most cases can be clarified quickly and there is no intentional deception, we always advise that you speak to the customer first.

If that does not work, you have the following options:

Automatic dunning procedure

If you have activated the ​automatic dunning procedure, Digistore24 automatically sends out dunning emails to inform the customer about the payment failure.

The reminder emails are sent 7, 14 and 21 days after the due date.

​Attention​​​​The direct debit fees will not be invoiced during the dunning procedure. These must be claimed externally.

Reporting fraud on Digistore24

As already mentioned, you should block the suspicious customer and/or affiliate if you suspect possible fraud. You can find out how to do this here.

​If you want to take legal action, you have the following options:

​If your case is successful, the costs incurred can ordinarily be reclaimed from the customer.

Refer the case to a debt collection agency or factoring company

Both debt collection agencies and factoring companies specialize in the commercial collection of receivables. They differ only in their approach: Debt collection agencies usually offer fiduciary debt collection (as well as other services), while factoring companies specialize in debt purchase, commonly known as "factoring".

​Fiduciary debt collection


= ​The company reminds the debtor again and, if necessary, initiates judiciary dunning proceedings.

Factoring/Debt purchasing


= ​You hand over your claim to the respective company and are paid immediately**. You then have no further say.

​Participation in shaping the dunning process

​Money back from customers if you are successful*

Money back directly from the company**

​You retain financial ownership of the receivable

​*Some debt collection agencies/factoring companies charge a success commission upon successful completion of the dunning process - this is deducted from your profit.
​**You get your money back immediately and do not bear any further risk, but you have to pay part of the amount to the company as a lump sum. This lump sum is usually between 10 and 15 percent.

​Most debt collection agencies/factoring companies are members of associations. If you are looking for a debt collection agency or factoring company in Germany, check the list provided by the ​Federal Association of German Debt Collection Companies or the ​German Factoring Association​.

​Refer the case to a lawyer or specialized law firms

In contrast to debt collection agencies/factoring companies, lawyers and law firms enable you to enforce your claim through a lawsuit, since they are permitted to take legal action. Debt collection agencies/factoring companies can only enforce a judicial dunning procedure.​​
​In addition, lawyers have a better reputation than debt collection agencies/factoring companies. Since they are more professional and focus on the individual more, they are generally more respected than companies that issue countless claims per day without being able to focus on a specific case.

​The costs for a lawyer/law firm may be passed on to the customer.

Initiate judicial dunning procedure

Initiating a judicial dunning procedure means that further reminders are sent to the customer. If this is not successful and the customer does not pay, an application for an enforcement order is submitted, which is usually accepted after a few weeks and ends up being enforced by a bailiff.

​The customer has 14 days to file an objection both after the first dunning notice and after notification that the enforcement order has been applied for.​ If this is the case, the case will be continued in normal court proceedings in the form of an action for payment.

​Costs of a judicial dunning procedure

​Can be reclaimed from the customer if successful

​Up to 1000

Fixed amount: 32

​over 1000

​Must be calculated

​Further costs may be incurred e.g. by having a lawyer or the filing of a disputed case after the opponent has filed an objection. However, these costs must also be borne by your customer if ​your appeal is successful.

​You can apply for a judicial dunning procedure in Germany here.

Initiate regular court proceedings

You also have the option of initiating normal legal proceedings by means of a lawsuit. You can claim the costs for a lawyer back from your customer if proceedings go in your favor. However, please note that only district courts are obligated to have a lawyer. You can lodge a complaint in a local court without a lawyer. Nevertheless, as the legal process is very complex and since inexperienced plaintiffs will find it difficult to take legal action without making errors, we strongly recommend you seek legal assistance.

If you are looking for a lawyer to support you, you can find a list ​here.

​If you want to contest the lawsuit yourself (remember it's only possible at a local court), you have to file a statement of claim.

Attention!

The options listed for dealing with outstanding payments and chargebacks are not to be viewed as infallible legal advice. Instead, they are to be seen as recommendations to help guide you, but may not reflect the current legal situation.

Updated on 28. February 2019

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