Many hoverboard merchants have been hit with the reality of fraudsters and are now stuck with the bill – including Soulja Boy. Concerned about the negative balance he found on his account, Soulja Boy wrote an email to the support staff of Stripe, the major online payment processing company. This email, sent on Nov. 12th, asked for help with the balance on his account; this account was used to sell the two-wheeled self-balancing scooter for $1,500 on his online store, “Souljaboard”.
Soulja Boy wrote to Stripe, “I need help all the payments are fraud…and it sent my account to negative because they all say they weren’t authorized. Please help in any way you can thanks. I don’t want to have to pay all this money because of frauds is there any way to reverse these payments and get my account to good standing.”
Fraud is not a small issue for online hoverboard purchases. In fact, they are plagued by fraud. This issue has not just been a problem for Souljaboards, with as many as three-quarters of all hoverboard purchases resulting in chargebacks. While the reasons for disputes vary, the majority of disputed internet purchases are the result of someone using stolen credit card information. In an account postmortem – an unsigned six-page document outlining “Remediations” and “Next Steps” – the issue has become so serious that Stripe considered suing its users in order to recoup the funds.
According to BuzzFeed.com, “Documents show that as of Dec. 7, Soulja Boy’s Stripe account held a balance of $-174,440.08. Between June 30, 2015, and Dec. 7, according to the same documents, more than 75% of all orders associated with that account were disputed after the fact.”
Soulja Boy is not the only merchant buried in chargebacks. IO Hawk, arguably the best-known hoverboard brand, currently holds a negative balance of more than $900,000 with Stripe. IO Hawk has been flagged as “unreputable” on the Stripe internal management system. They also noted on the account that IO Hawk is “one of our largest losses ever, merchant was not suited to run a business of this size and with such a risky product”.
Payment processing services like Stripe act as a go-between. When a purchase is made online, the credit card company passes the charge to the payment processor, who then puts the money into the merchant’s bank account. When a dispute is made and the credit card company agrees a refund is called for, the payment processor is then obligated to debit the merchant’s account. This is where it becomes a big problem for the merchant. They are out the cost of the product and the shipping cost, and they are liable for the fraudulent charge.
For merchants, which payment processor you choose is incredibly important. Chargeback prevention and protection programs are a must. With a high risk provider like emerchantbroker.com, your business will be notified immediately when chargebacks occur. Through EMB’s chargeback shield, your business can become proactive in the process, enabling you to keep the money you earned. To learn more, contact EMB today, and be sure to ask about our hoverboard merchant account.