G8Only Case Study
Increase in approvals
Fraud-related tasks eliminated annually
“Turning NoFraud on was like a magic switch. Poof! All of a sudden our fraud problems disappeared.”Joe LaBruzza, Founder @ G8Only
Joseph LaBruzza founded three online retail sites that service the aftermarket automotive performance market — G8Only.com, LSXOnly.com, and SSOnly.com. This is the story of G8Only.
How It All Began
In September 2013, Joe LaBruzza brought home a Pontiac G8. As a very short-run production vehicle that was imported under GM but manufactured by its Australian subsidiary, Holden, he quickly realized finding parts specific to his new vehicle was harder than expected.
Joe was looking for a bumper splitter that fit the car well, but realized he needed to take matters into his own hands. With his design background, Joe crafted his own splitter and shared his creation online with the G8 community. Community members took notice and began requesting Joe’s custom splitters for themselves. However, accepting payments online required him to register as a business; and thus, G8Only.com was born.
As Joe dove headfirst into the automotive performance market, he noticed a massive opportunity to become the go-to source for G8 parts — a trusted site for G8 aficionados that would take the guesswork out of finding the right parts. He invested his time and resources into building the site’s inventory, and soon his side passion became his full-time job.
PayPal Fraud Prevention Limitations
“Fraud has always been prevalent in the automotive performance sector,” notes Joe, but it wasn’t until about a year into his new business did he notice it starting to hurt his bottom line. At the time, he used PayPal for all his payment processing needs, but the solution didn’t do enough for fraud detection and deterrence. Joe noticed customers would dispute charges and initiate chargebacks that he would lose in representment. Each chargeback was a big loss for his business because he’d lose out on the parts and the revenue from the transaction, not to mention the added chargeback fees.
In an attempt to reach a resolution, Joe started shipping only to confirmed Paypal addresses, but this didn’t solve the fraud problem. As the business continued to grow, so did fraud. “It’s a numbers game. Say 5% of your transactions are fraudulent; 5% of $100,000 a year doesn’t sound like much, but 5% of $1 million? It just gets worse,” says Joe.
PayPal’s fraud prevention limitations meant the G8Only team needed a better solution to support their rapidly growing business.
A Payment Processor of a Different Color
The G8Only team decided to cut ties with PayPal and try a different payment processor that touted better fraud protection mechanisms. It didn’t work. “We did the math and saw we lost nearly $100,000 to fraud in a single year,” Joe shares. “We were getting hit with massive fraud bills and it really started to take a toll.”
Joe and his team got serious — real serious. They started analyzing transactions and identifying patterns. They flagged fraud hot zones; California was by far the worst, followed by Michigan (specifically Detroit), and some areas in the Southern states. With 40% of California orders coming up fraudulent, G8Only ended up cutting off business with California altogether. Joe put a code on the site to prevent Californians from checking out, which unfortunately was a very hard call because California also provided a lot of legitimate business. Some customers contacted Joe directly, asking how they could still buy from him.
Wanting to deliver and delight his customers, Joe set up a separate, new process for California orders. He started invoicing trusted customers directly, building a waiver into the purchase process that required signature and government identification to authorize each transaction. Joe went one step further to triple-check that customers were who they said they were by running a background check on each order to ensure all the addresses matched. The solution wasn’t sustainable as it added too much friction for both customers and the G8Only team.
Joe’s team spent an average of one hour confirming each order, which added up to about 20 extra hours of work per week. The added steps often lead to days passing between signatures and requests for additional documentation, ultimately leading to shipping delays and a less-than-ideal customer experience. With the amount of time they spent verifying California orders, they ended up losing money on every order.
The Power of Community & Confronting Fraud
“The community we serve is a very niche and tight-knit group of dedicated individuals who know each other,” shares Joe. The passionate group converses and collaborates through online forums and Joe makes himself available to customers and community members alike to talk shop after-hours. So naturally, it felt personal — and was incredibly disheartening — when he learned that even some of the community members were defrauding him.
Joe collaborated with others in the community, who rallied behind him, as he shared fraud cases in an effort to band together and reduce the growing fraud problem. He even contacted a few fraudsters directly to confront them and was amazed by the stories they told to justify their crimes. Joe says many responses were essentially, “Oh, I’m sorry! I thought you were a larger company, so I didn’t feel bad ripping you off.”
Joe’s outreach was successful in a few cases as some fraudsters ended up legitimately paying for the parts they stole, but most cases left the company without parts or payment. Joe attempted to work with local police departments to recoup his losses when he learned the discouraging reality that there was nothing they could do.
In one example, Joe reported a theft — a $1,300 chargeback — for which he provided all the transaction, shipping, and address details proving the crime to authorities. The shocking response from the police was a hard reality to accept. They did not recognize Joe as the victim in this case; instead, it was the unassuming cardholder. Frustrating to say the least, as the cardholder was able to get their money back from the credit card company, the fraudster got $1,300 worth of parts for free, and Joe was left without parts or payment.
“eCommerce fraud is not a victimless crime, but in the eyes of the law, it can seem that way,” says Joe. Even though he had all the transaction details proving the crime, law enforcement referred Joe to the FBI Cyber Division. However, since the fraudulent transactions were under the $10,000 threshold, it wasn’t a priority for the FBI cybercrimes team.
Unfortunately, Joe is really the only victim in this case — and many other merchants suffer the same fate. Time was ticking and the growing fraud problem was going to meet its match real soon.
NoFraud is a Magic Anti-Fraud Switch
At the end of his line, Joe and the G8Only team started diligently searching for an anti-fraud solution. He didn’t realize a solution existed and thought this was something he had to deal with on his own, but a quick Internet search landed him at NoFraud.com. After dealing with fraud for so long, Joe was clear on his list of requirements that he needed in a fraud prevention solution:
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