E-Commerce for All

Merchant Processing Survival Tips 2010

If you haven’t read about the new “Brand Damaging” issues and you accept credit cards on your website… You need to. The potential impact on your business is too large to ignore.

Now that you have hopefully informed yourself, let’s concentrate on keeping you out of trouble and getting canceled.

The new rules may seem a bit daunting, but they are really pretty simple…. If it’s trickery, you cannot do it anymore. You may be sitting there thinking, “I have been running this “Free Money” website for 10 years…. This doesn’t apply to me. You are most certainly wrong. These are new rules, new implementations and new punishments for violations.

The cost for violating one of these rules and getting caught (and you will) is at it’s best cancellation of your merchant account or gateway account…. At it’s worst, very large fines and cancellation. Heed this warning, even if you haven’t received any communication from your Merchant services providers.

Merchant Processing Survival Tips 2010

Online marketing campaigns that employ any “Free-Trial”, “Deferred Billing” and/or “Shipping Only” are considered trial offers and are subject to the new rules. Consumers must receive a tangible good or contracted service in exchange for the credit card charge(s). Incentive type discount offers are acceptable ONLY when the cardholder is receiving goods or services in exchange for payment. Having said this, note for example that e-Online will no longer support

accounts engaging in hidden or delayed charges and ‘free’ offers that are not truly free.

1. Avoid using  “free” or “risk free” language on your website and in marketing campaigns (including PPC) .. Unless it is 100% really free.
2. If you use the “Pay Shipping & Handling Only” technique, then these charges must be fair, reasonable and fully disclosed. So if you have been slipping by on the $5 shipping and $20 handling fee, you must stop. Also note that inflating your actual shipping has additional implications as well… Did you know that most states expect you to pay sales tax on overcharged shipping fees?
3. Trial offers need to be no less than 10 days and the trial period should not begin until product is shipped to the consumer or the service has begun. You are not permitted to offer trails with exemptions, filtering or special rules for age, weight, height, geographic location, race etc.
4. Avoid creating a false sense of urgency because if the matter is not genuinely urgent you are in violation. For example if you have the “10 day only” message running on your website for 3 years now… You are in violation. These periods of offers must be genuine and accurate. e-Online has strictly forbid the use of  applications such as countdown clocks, tickers, or language such as “Offer Expires Today!”, for example already.
5. By mandate of the FTC, product claims, promises, guarantees and research claims MUST be accurate and proper. This is pretty unlimited and includes testimonials, endorsements and even product reviews. Don’t think for one second that user supplied product reviews are exempt… It is your website right? Not only do you risk loss of merchant services with these issues, but the FTC can fine 11K on top of whatever the credit card companies may choose to fine you for your “Brand Damaging” behavior.
6. How about the FTC’s new rules for pricing? Prices must be within reasonable “fair market value”. Any negative options must be clearly disclosed, and you cannot bill for any product or service that the shopper/consumer did not knowingly purchase… Including things like upgrades and software updates, for example.
7. If you have a special offer which includes some shady marketing like exclusions or negative options you are required to have that customer agree to the terms twice before charging them.

The first validation can take place with the initial offer presentation prior to submission of credit card information, and the second during the checkout process. The confirmation order page must also require consumers to acknowledge that they agree to the Terms & Conditions and authorize the merchant to charge the credit card for the disclosed dollar amount. Terms must be displayed adjacent to the “submit”, “confirm” or any other “call to action” button confirming the order. The price must be within 100 pixels of the “submit”, “confirm” or any other “call to action” button.

• Shipping and Handling should not be billed separate from charges for the product or service.
• Terms must be in a minimum 12-point “easy to read” font.
• Avoid visually distracting graphics from the display of terms.
• Pre-checked boxes must never be used.
• Consumers should be required to actively and individually select each offer or bonus during the checkout process when there are multiple offers or up sells presented. No offers or up sells should be pre–selected or pre-checked.
• Consumers should not be able to move forward in the offer or checkout until the box acknowledging the terms is checked.
• Verbiage must clearly disclose the enrollment into an ongoing membership with no distraction. An example of an acceptable disclosure is: “By clicking “Submit” you acknowledge that you understand you are being enrolled in a 10 day trial for $4.95, and after expiration of the 10 day trial period you will be charged $59 per month until you cancel your service”
• All products or services purchased when the call-to-action button is clicked should be billed as a single charge unless the order is fulfilled at different times requiring multiple charges.

REFUND POLICIES

Merchants must not make it difficult for consumers to exercise the disclosed cancellation procedures and all cancellation requests must be honored in accordance with the stated terms of the transaction.

1. Refund policies must be disclosed prior to the sale completion. Establish a clear, concise statement of your refund and credit policy. Your policy should be consistent with the objectives of your business and the products or services sold.
2. Merchants must not require return of any trial offer product samples in order for the consumer to receive a refund, or cancel their ongoing subscription.
3. “Full Money Back” or “Full Satisfaction” guarantees are considered false and prohibited unless the offer provides a full refund on all products, including but not limited to Shipping & Handling charges.
4. Refunds should be for the full amount charged including shipping and handling
5. All future billing to a customer should be canceled when a refund is issued.

All future billing to a customer should be canceled when a chargeback is received.

RESOURCES:

The FTC has published the regulations along with many resources online for businesses and consumers like yourself to learn and understand the new regulations.  A few helpful links provided by e-online are included below:

Commercial Practices Part 425, Use of Prenotification Negative Option Plans

Prenotification Negative Option Plans

Advertising and Marketing on the Internet

Dot Com Disclosures

Direct Response industry publications have provided articles with some clarification regarding these guidelines:

http://www.responsemagazine.com/resources/legal-resources/legal-review-getting-strict-with-negative-option-marketing-1351

http://www.dmnews.com/get-comfortable-with-new-ftc-regs/article/136023/

So, are you scared?

If you have been utilizing these techniques, then you probably should be. Realize that the allowable fines and penalties for violations of these rules can mean the death of many if not most small businesses. On the lighter side, even receiving the cancellation email from a merchant provider, allowing you a very short 2 weeks to make other arrangements for processing or gateway services is enough to put you in the poor house.

Take heed, learn and understand these practices, and when in doubt contact your merchant providers… speak with someone in underwriting and have them look at your website and marketing materials and provide you the correct way to market your products…. Before the axe falls.

admin E-Commerce Marketing, Small Business, So you want to be a Shop Owner Series

Brand Damaging

First let’s attempt to define what “brand damaging” actually means. It’s really a rather ambiguous, mostly legal term referring to statements, actions, images, content, theft and other actions causing damage or harm to one’s brand. Be that brand an authors name, a business or a service.

Many times this type of issue involves another nasty term, “identity theft”. The connection comes from associating a known brand, such as the case with Jeremy Schoemaker in 2008. This matter was one of the first notable cases I have seen reported. In this case,  the Hydra Network or one of its affiliates made unauthorized use of a picture of ShoeMoney holding a check and the accompanying ad claiming he had made the money using a scam called “Google Money Tree”.

How does this affect shop owners?

Many of you will have already received a letter of intent, or decided changes from your merchant bank if you process credit cards. The changes or proposed changes are quite frankly in answer to Visa Mastercard’s intent to take action in response to increases in consumer disputes related to card not present and direct response products and services.

It’s not really Greek, in a nutshell, if you, your practices, your security or your products and services are a bad risk, Visa Mastercard feels that this damages their brand.

These forthcoming and anticipated payment brand mandates and requirements will change a great many things for some merchants. For example e-online has already adapted the following policy changes:

e-onlinedata cannot accept merchant applications for products and/or services employing “Negative Option” enrollment, in addition to the following practices:

• Marketing models that employ “Free-Trial”, “Deferred Billing” and/or “Shipping Only”. Customers must be receiving a tangible good or contracted service in exchange for charging of payment cards. Incentivized discount offers are acceptable when the cardholder is receiving something in exchange for payment, however we will be unable to support accounts engaging in hidden or delayed charges and ‘free’ offers that are not truly free.
• “Cross-Selling” and “Up-selling” business practices. All sales should be directly between the business entities (merchant) processing the transaction and the cardholder, with cardholder authorization for all purchases.
• Per Payment Brand guidelines, the use of multiple merchant accounts, billing descriptors and merchant processors may be viewed as an attempt to avoid chargeback monitoring programs and is prohibited. Perceived non-compliance has led to termination of processing relationships. e-onlinedata will review the business consideration for opening multiple merchant accounts to ensure compliance with Payment Brand guidelines.
• Transactions generated from internet traffic and all other lead sources must be managed and monitored for potential fraud using an approved system. Third Party service engagement may be a requirement for account approval.

Of these, the most likely ecommerce merchant concern is the last. The last statement refers to properly managing, monitoring and PCI compliance of your shopping cart, hosting and merchant gateway. These are not recommendations, but rather already required for merchants. When you signed your merchant agreement, you also agreed to maintain the proper PCI/DSS standards and mandates.

Originally, PCI was Greek, however, merchants are learning and much support is available to meet the needs of small businesses whose budget for these matters can be quite small. Your merchant provider, merchant gateway provider or PCI approved scanner can help you to understand and manage the protocols necessary to keep not only yourself, but your shoppers safe. I have a post here to get you started on the road to PCI compliance.

It is clearly worth noting that the FTC (Federal Trade Commission) has already moved on the “Negative Option” marketing technique. Additionally, the FTC recently made changes to the requirements for paid testimonials, blog posts and endorsements. These are also clearly targeted at the web, and I think we can expect to see more of the same with big fines from the FTC in the future.

Not only are these things right and proper in my opinion, but changes to protect consumers on the web are long overdue. I think if you run and honest business in good faith you will not have any issues, frankly, those sapped by the movement to protect Internet consumers are in general those who would strive to deceive and take advantage of consumers…. Giving us all a bad name and damaging our brand as well!

admin E-Commerce Marketing, Small Business, So you want to be a Shop Owner Series

Ecommerce Marketing

Internet use is still growing year after year, and as more and more people have Internet access, more and more small businesses are recognizing the importance of integrating some form of ecommerce / online catalog as part of their business marketing portfolio. The Internet never goes offline, and websites are accessible every hour of the day – there are no opening and closing times on the Internet serving a worldwide market.

For the average person, the ability to be able to shop from the comfort home is a very welcome idea, and is becoming a very popular method of purchasing goods… Even for mobile users! Those customers who still prefer the tangibility of a brick and mortar store, the Internet still provides a way of researching the products they are interested in, to compare different prices, gain product knowledge and prepare to make an educated decisions without salesman pressure.

Another advantage of the Internet is its worldwide reach. Small business retailers no longer have to have brick & mortar stores in many different geographical locations to become a national brand – by selling on the web, they can get their product seen by a much larger audience.

However, it is not as simple as setting up online and customers automatically come flocking to your shop; a lot of hard work needs to go into developing, promoting and securing your online store, thus tackling many of the same related start up and maintenance issues with a brick and mortar store. The biggest difference is cost, while you may end up paying a couple of thousand dollars to properly develop your shopping cart… you will still be saving on start up fees, rent and other traditional business overhead costs These savings can then be passed on to the shoppers, making your business more competitive in its niche.

Undoubtedly then, a small business with a Internet promotable product would be foolish to overlook the power of the ecommerce. Businesses should plan and look to incorporate some form of ecommerce into their current business marketing portfolio. Be aware, however, as major differences exist between selling online and selling in real life, and you will need to build up a high level of trust with Internet customers… In perhaps ways you are not yet accustomed to.

admin So you want to be a Shop Owner Series, Store Development

Ugh!

I guess one of the most disappointing things we deal with in our business is the “ugly” or “darkside” of how others deliver web services. There is not a single day that goes by where some website owner doesn’t contact us with issues related to the development, design or even ownership of their site. Everything from broken promises and deceit to outright performance issues send these customers hunting for a “new webmaster”.

We have dealt with some very disheartening issues for our clients. They call and need to move their site to proper hosting and can’t because they don’t have access, they find they do not own their domain registration, they have been locked out of and charged for GPL/free built in software functionality or their webmaster flew the coop.

While these issues do pain me, I have decided that all we can do is provide quality, honesty and transparency in our own business. So to that end, I am providing prospective new website owners the following list of tips and precautions before choosing a designer/developer and beginning a website project.

1. NEVER, EVER let a designer register your domain in his/her name. If this is how they insist on doing business, then find a professional.
2. Make sure you have full access to your hosting services, including support. If they want to host you in their account, then insist that you obtain your own hosting. If they refuse to play ball… find another.
3. Know what you want and need. Develop a list of the functions, look and services you need. Provide this list to several prospective developers and make them explain how these options are best accomplished. Those that cannot …. get dumped.
4. Know your software. If you choose a software driven site, such as Zen Cart, read and learn about the software. Buy a manual and really know what you are getting, then find a developer with a great deal of experience with your chosen software. This really matters, you see a general web designer cannot handle developing a Zen Cart project for example. They will only hack, crack and break the software functionality with their inexperience…. Costing you upgrade, development and repair money in the future.
5. Be ready to work…. This is your website right? There really isn’t any money for nothing going on here… That is a bullshit lie propagated by people who would seek to take advantage of you long term. If it sounds to good to be true, it is.
6. Do not rely on a sole person or company for the maintenance of your website…. People go missing all the time. Make sure you have a backup person and you are able to provide them the needed access (hosting logins, FTP and admin information) to help you in a pinch.
7. Remember when you hire a professional, they are the professional. If this person tells you something is a really bad idea, you should likely listen…. are you a web developer?
8. Insist on a development time frame and frequent updates. Development schedules get busted up all the time, but you need a plan and to be kept abreast of the setbacks and new expected schedule forecasts.
9. Check your developer out. Contact owners of some of the websites in their portfolio… Better yet, send links to each of the prospective developers of each others sites and ask for their opinion =-). Google the developer or company name looking for the good, bad and ugly comments you may find. Really check them out, this is alot of money to simply throw away.
10. Ask alot of questions! Every single thing you want, need to know, or do not understand needs to be asked…. This is your website and you need to know.

It’s also a good thing to user a designer/webmaster that has more than email access for support and questions, what if you are not at your computer and your site is down?

Being successful on the web takes a great deal of dedication and learning, all you do is in a constant state of change in this business. You never stop learning, adding new content and building links…. This is the cost of Internet success, make sure you are ready to pay it up.

admin So you want to be a Shop Owner Series, Store Development