If you paid us with a credit card today, you may have noticed a tiny little difference with the form…
We removed the “(optional)” bit after the Security Code section.
WHY would we go and do a thing like that?
Didn’t we already say those CSC codes have about a 0% effectiveness against fraud?
Weren’t we proud of not requiring their use in our system?
Isn’t it just one more annoying hoop between us and your money?
Yes, yes, and for sure!
The reason we’re now requiring CSC codes on all credit card transactions on our site is actually pretty simple.. Discover required us to!
Why the sudden enforcement?
Apparently, in March, an insane 19% of our monthly total with Discover was charged back!
“Zuh? For real?” I couldn’t believe that it was that high… typically credit cards start getting mad at you when your chargebacks get above one or two percent.. how did we ever get to nineteen?! Was our fraud checking that horrible? Were Discover card holders super-susceptible to phishing scams? Did they maybe just have the decimal point in the wrong place?
As it turns out, it wasn’t exactly for real. The 19% included transactions we had already refunded after detecting fraud! The total for chargebacks we didn’t catch was just under 1%. Phew!
You see, what’s been happening is as follows:
Somebody signs up for a DreamHost account with a stolen Discover card.
We charge the card say, $119.40.
We notice the account looks fraudulent, so disable it and refund the $119.40 to the credit card.
The credit card owner, Steve McGinty, gets their bill, and either sees the $119.40 and no refund (yet), or sees both the charge and the refund.
Steve gets angry/hurt/confused, and calls Discover.
Discover answers the phone on the first ring.
Mr. McGinty says to Discover, “Who, or what, the hell, is DreamHost?”
Discover says, “Don’t you worry about those jerk-nuts, we’ll handle them but good!”
Satisfied, Steve-o gets off the phone and quickly gets back to dealing with his urgent SECURTITY RELAT3D EMAILs from paypal, ebay, amazon, bofa, wamu, citibank, and Nigeria.
Discover sends us a “chargeback notice.”
We tell Discover, “Hey, check your records, we ALREADY refunded that charge.”
“So you did, our bad, this is still going on your record!” they reply.
In summary, it’s kind of a waste of everybody’s time.
Fortunately, Discover has the perfect solution!
“Require CSC Codes.”