If there’s one thing that just about every webmaster – whether mainstream or adult – has in common, it’s concerns about credit card fraud and billing. Ever since the ascension of the Internet as an alternate (and increasingly dominant) force in sales and shopping, online billing issues have plagued anyone offering a product for sale and made it virtually impossible for anyone trying to buy something to feel 100 percent secure.
The adult Internet industry especially has been hit hard by credit card fraud. Sad as it is to say, there are shady characters that think of the industry as a large crib s full of babies just waiting for anyone to come along and steal their candy. “The adult industry is an atmosphere that has consistently been hindered by chargebacks and fraud,” says Howie Schechter, co-founder and director of client services of preCharge, a financial risk management company based in New York City. “When a client walks into a storefront or visits a website, the question remains, ‘What happens if this results in fraud?’ When it comes down to it, the fear of fraud is the single great factor hindering a business today.”
Luckily, a few companies (like preCharge) have recently come to the rescue, making it easier to feel confident about making online purchases and removing virtually all hassle from the experience. preCharge was created in 2003 by Schechter and two of his colleagues (Alex Corral and Gwen St. Clair) from financial service company Supremacy Financial Corporation. According to Schechter, “The company was founded on the belief that merchants should not be hindered by credit card fraud.” In its infancy, the company began as a cost-effective fraud-scrubbing solution for small to medium businesses that couldn’t afford their own screening.
However, as the trio quickly discovered, “even the best scrubbing solution would not be able to deter all fraud and chargebacks, especially friendly chargebacks,” so preCharge quickly expanded into a “liability coverage service” that covers all preCharge-approved transactions for all businesses, no matter what their sizes.
Relying chiefly upon the financial backing of parent company Supremacy Financial, the company quickly went to work in finding the most reliable technology solutions, and soon achieved its Level 1 Visa certification after a series of certification processes and auditing from several third parties. Within a year, preCharge grew from a three-person operation to the highly staffed (more than 50) company it is today. The staff at preCharge prides itself on ensuring a smooth transaction and making sure that there is never any downtime for its site’s server. “Our hosting provider guarantees preCharge no less than 100 percent up-time,” Schechter notes. “Anything less would be inexcusable.”
Operating from the company’s ambitiously inclusive motto (“It is our social responsibility to ensure that the lives of those we touch are made better with every passing moment”), preCharge took it upon itself to offer a beacon of hope for those who have been burned by fraudulent customers and less-than-honest business folk. However, the company takes a realistic and practical approach in doing business. As Schechter says, “Many businesses try to portray their business idea as the end-all, be-all solution to common sense. PreCharge doesn’t portray itself as the end of fraud, just the beginning of a new way of doing business—one that does not include fraud as a component.”
Schechter is quick to note that “preCharge doesn’t eliminate fraud; it [instead] stops fraud from hindering the success of business.
“PreCharge does not try to offer everything to everyone,” Schechter explains. “We don’t try to compete with the industry at hand. The preCharge system is fully compatible with every merchant account, every processor, and every gateway. PreCharge does not attempt to change business but rather protect it from the inevitable fate of fraud and chargebacks.”
PreCharge relies upon a number of tools to ensure smooth transactions for its merchants, employing “a combination of advanced technology supported by enterprise-grade companies and a sense of business logic that is second to none,” Schechter boasts. Though he admits that fraud prevention itself is not a new concept, he contends that “the combination of fraud protection and business logic is a concept seldom tried before.”
The company’s Certified Payments Program works in much the same fashion as check guarantee. Merchants are offered 100 percent coverage for all transaction liabilities, which means that on top of preCharge’s proprietary fraud screening solution, merchants are guaranteed complete reimbursement for any fraudulent or disputed transactions initially approved by the preCharge system. The unique system recognizes and rejects clients with previous chargeback histories and is also able to parse out improperly configured mail and SMTP servers.
What’s more, the intercompatible ASP solution works with almost all gateways and shopping carts, offers user transparency so that a consumer’s shopping experience is not interrupted, provides disaster prevention against unstable chargeback rates, and supports currency and operational systems from more than 100 foreign countries. And for companies worried about maintaining business integrity, Schechter says there’s no need to fret: “Unlike other fraud screening providers, preCharge gives merchants the option to customize all the fraud screening aspects to adapt to their business model.”
All of this adds up to what Schechter boasts as “full liability protection, period. We can handle any processor, any gateway, from all around the world. This assurance gives merchants the benefit of a global marketplace without the fear or headache of chargebacks or fraud. PreCharge streamlines the transaction process for the merchants, so that all screening is fully automated.”
Additionally, Schechter says, the company’s complete autonomy provides its clients with even more benefits. “PreCharge does not rely on banks or other outside sources to verify and authenticate transactions which more often than not will hinder authentification,” he notes. “The system is completely homegrown and works to provide merchants the best and most accurate solution available.”
Schechter says that using a company like preCharge can help to make doing business on the World Wide Web live up to its hype. “While the Internet was promised as a global medium, fraud has prevented that from being the case,” he posits. “When a transaction comes in from any one of the 180-plus countries that now take advantage of the Internet, does AVS, Manual Review, CVV2, or any other competitor solution offer the level of protection any business feels comfortable with? With preCharge, any transaction approved by us is covered against all liability, period. This contributes to the Internet being able to realize its full potential.”
One thing that is certain, however, is that “at the end of the day, no matter how much time a merchant spends reviewing transaction[s], fraud will occur,” Schechter says. “It is a huge concern amongst the entertainment industry, and oftentimes it is thought that going with a third-party biller will solve that problem, even though it is usually more expensive than traditional credit card processing. The truth is, many third-party billing companies – if they do survive the pitfalls themselves – withhold funds from merchants, which creates more problems than the fraud itself.” Schechter adds that, “regardless of the billing management solution any [business] decides to go with, it’s important to understand the complete aspects of fraud and how they can hinder a business. A lot of competitor solutions may seem like the answer, but at the end of the day, any business has to ask, ‘What happens when fraud does occur?’”
Schechter notes that the adult-entertainment industry is especially susceptible to fraud, making it doubly important for webmasters to consider using a secure billing solution. “The adult industry is by its nature one of the most lucrative and profitable online industries—on the surface,” he begins. “However, due to constraints caused by fraud, it can also be the most dangerous. Business isn’t easy, and the entertainment industry is no exception. When it comes to uncertainty, the entertainment industry is unmatched.”
That uncertainty has proved to be somewhat of a challenge to preCharge, but one the company has welcomed. “Over the course of the past year, we have seen many businesses come to preCharge as their last line of defense, and while the challenges of the entertainment industry have presented new issues to preCharge, we have come through as the leading provider of liability protection for the industry. And it’s certainly helpful to our business model to be able to assist so many businesses online.”
And while Schechter acknowledges that preCharge’s involvement in the adult industry has turned into a lucrative venture for the company, he is confident that preCharge is providing a much-needed and integral alternative to adult businesses—one that can help them stay in business. As he succinctly puts it, “There are several reasons why a business can cease to exist. With preCharge, fraud is not one of those reasons.”
