Adult Site Broker Talk Episode 68 with Raja Roy-Choudhury of Chargeback Help

Speaker 1 (0s): This is Bruce Friedman of Adult Site Broker and welcome to Adult Site Broker Talk, where every week we interview one of the movers and shakers of the adult industry, and we discuss what's going on in our business. Plus we give you a tip on buying and selling websites this week. This week we'll be talking with Raja of Chargeback Help.

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Now let's feature our property of the week. That's for sale at adult site broker, we're proud to offer for sale. The first NSFW social media platform in the world. The web app benefits from innovative technologies that enable over 960,000 members to instantly share their sexy photos and videos via computer or mobile. Today, the site has more than 200 new members signing up daily with zero spent on marketing. These leads are essentially coming from organic SEO, word of mouth and premium backlinks.

The site has received great articles and top magazines such as Playboy daily dot refinery, 29 and more in 2019, the site started recurring subscriptions, which made it a more private platform since only registered members now have access to the content while it impacted the traffic on the platform. The user base is now very valuable as the site only accepts verified users. There are now over 60,000 active members. Average time on the site is over 10 minutes.

The site has a team of four super-users moderating the platform to ensure there is no illegal content among the photos and videos. Also there's a report feature so that every member can report content that might infringe on somebody's writes.

Speaker 2 (2m 60s): The site gets most of its traffic from the USA, Brazil, Mexico, France, and Spain, all this for only $843,000. Next Monday on the hanky panky podcast, coral and Juul will welcome male performer and producer, Texas bolster, but you can find the hanky panky podcast@hankypankypodcast.com and wherever fine podcasts can be heard. Now time for this week's interview.

My guest today and adult site broker talk is Raja Choudhury of chargeback help. Roger, thanks for being with us today on adult side broker talk, thank you for having me. It's a pleasure. Now. Raja is founder and CEO of chargeback help. Roger has worked in the e-commerce space since its infancy in the nineties, starting out as a merchant entrepreneur, Roger gained extensive experience in payment processing and its risk. In particular, you notice the chargebacks and fraud cost him and his peers, significant time and resources to deal with.

And in many case, colleagues were losing their processing entirely. So in 2013, he co-founded chargeback help to help merchants fight back against fraud and chargebacks. The venture has since grown with offices in the U S and Europe with clients ranging from small high-risk businesses to enterprise level firms with large merchant portfolios, chargeback help currently provides dispute management solutions through an essay S S platform called chargeback help. Plus the platform integrates a variety of tools that not only help merchants reduce chargebacks, but also allow them to recover revenue from friendly fraud and even prevent the disputes that become chargebacks from ever happening in the first place.

Chargeback help has its roots in adult. Now, Roger, maybe you can tell us a little about yourself and how chargeback health came to be.

Speaker 3 (4m 59s): You did a pretty good job in explaining here we are. We, we started off as merchants in the adult space. We've run adult offers for, I can say decades now. I can't believe I can say that. That's really true.

Speaker 2 (5m 18s): We're both old. Now

Speaker 3 (5m 21s): We were having, we were having an issue with chargebacks and we were given an opportunity by a company called verify to become one of their first reselling partners in the, in the adult space. And that's sort of how we got our start.

Speaker 2 (5m 40s): Now let's talk about where did charge backs come from? And maybe you can explain the more for the lay person

Speaker 3 (5m 48s): Ashley. One of my pet projects is to help people understand the birth of chargebacks and why we're in this mess to begin with. So in the 19, we have to go back all the way to the 1970s. And the 1970s is sort of when credit cards starting becoming popular in the U S and the government needed the credit card companies to come up with the way so that consumers could dispute a transaction with the credit card companies.

And in the 1970s, the consumer protection act was born and they created charge backs, right? So this system that we're dealing with now has its roots to an, to a commerce space in the 1970s where there's no internet, there's no recurring transactions. Everything had to be done in person. So the, the idea of a chargeback was that it would, it was never supposed to be designed for a card, not present situation.

It was never supposed to be designed to be done over the phone or over email or over fax, right? The chargeback space has simply evolved to those sectors because no ones, no one until very recently has decided to overhaul this chargeback process. Again, that was started in the 1970s. But thankfully it looks like these are MasterCard are making some significant changes to the, to the dispute system.

This call is sort of about an opportunity to talk about those changes and how they're going to affect all merchants and what they can do to be prepared for them.

Speaker 2 (7m 44s): Interesting. Interesting. And when do you think that they'll have those, those rules and regulations finished?

Speaker 3 (7m 53s): I mean, I've been talking about them for a couple of years now, and these, I was supposed to launch them April of this year. They delayed that until October of this year. It is my opinion that they are going to miss the October deadline as well. And we are probably looking at a soft launch, maybe next April.

Speaker 2 (8m 19s): Now, I guess, going along with this, the card networks want to retire the term charge back. Why would they want to do that?

Speaker 3 (8m 28s): Well, again, the term, the term chargeback is archaic and it's not really descriptive of exactly what is going on, which is simply a dispute between a merchant and the consumer. So the term chargeback is supposed to represent the settled transaction, where it has been determined that the liability lies with the merchant and not the, and not the consumer and not the actual process of the dispute.

So what we're going to do now is we're going to go back to very, very basics. And we're going to talk about these things as disputes, which is what they are simply a dispute between a merchant and a consumer. Okay.

Speaker 2 (9m 15s): Okay. Now explain dispute management for us and how it goes beyond chargebacks.

Speaker 3 (9m 21s): Sure. So dispute management goes again, every time there's a point of contention between a merchant and the consumer. We're going to call that a dispute and not simply a chargeback. And what visa has done recently, and MasterCard will as sued to follow is they've created mechanisms that allow merchants to send back transaction information directly to the consumers, issuing bank at the onset of a dispute.

Meaning that right now, what happens is you have this process where a consumer gets to call their bank and simply state their side of the story. And the issuing bank has no idea what happened on the merchant side. Well now through a product called order insights for MasterCard, sorry for visa and consumer clarity for MasterCard, the consumer's bank can click a button and request more information regarding that particular transaction that the consumer is disputing.

And in real time, the merchant has the opportunity to send the transaction data to the issuing bank and show the issuing bank that the consumer did. In fact, make this purchase did receive the goods or services and did interact with the product right

Speaker 2 (10m 43s): Now. Now, how does chargeback help provide dispute management for your clients?

Speaker 3 (10m 49s): Well, so we, we are connected to the visa and MasterCard dispute this new system. We then therefore, so we do charge back end to end. At the beginning of the dispute, we send it, we send the information to the issuing bank to help persuade the issuing bank that the transaction is in fact, not eligible to become a chargeback and the liability side with the consumer. If the, if the, if the issuing bank still believes that they want to proceed with the charge back then it becomes, it gets diverted to an alert.

And at this stage, the Merton, the merchant has the opportunity to accept the liability on the transaction refund, the transaction and the charge back will go away. The merchant also has an opportunity to be like, you know what? We still want to fight this charge back through what we call the representant and then the merchant can tell the issuing bank, you know what? Go ahead, file the charge back. We're going to represent. Hmm.

Speaker 2 (11m 56s): Tell us more about the representation.

Speaker 3 (11m 59s): Sure. Represent is once, once it has been, once a chargeback is received by the merchant, they have an opportunity to file some paperwork and some documentation to show that the chargeback was in fact, a valid transaction and that's the consumer should be liable for the purchase.

Speaker 2 (12m 19s): Okay. Are you, is this done in most cases?

Speaker 3 (12m 23s): No, it has done in very few cases. I think that the actual representation stats are something like 10% of chargebacks are represented. Hmm.

Speaker 2 (12m 35s): Why

Speaker 3 (12m 35s): Is that? Most merchants don't don't know how to do it, or they've tried a couple of times and they've either done them wrong or they didn't submit enough documentation. And so they've, they, they lose a couple of represent mints and the packages take some time to put together. So they decide it's not worth it.

Speaker 2 (12m 55s): And you do that for your clients.

Speaker 3 (12m 57s): We do. I mean, that's one of our core businesses is we, we put together the packages on behalf of our merchants. We are very good at automating this process so that we connect through the merchant via API, and we gather all the data electronically and then put the package together. We also connect to the merchant cake, our merchant bank accounts, our merchant accounts, so that we can pull the chargebacks directly from the merchant accounts.

And then together without me put the packages together through integrations to the merchants, gateway and CRM.

Speaker 2 (13m 36s): Hmm. That's great. Now let's talk a little more about compelling evidence as it relates to adult. What's the best data for adult merchants to use and fighting chargebacks.

Speaker 3 (13m 48s): The more proof that the merchant can show that the consumer integrated with the product or use the product to better off the merchant is so login history, any content that they viewed, any customer service emails, any phone calls, if they, if they are using a call center that records the phone calls, we can even attach a, a, a voice file will allow the issuing bank to play the message.

Any, if it's, if they have chat history, if it's a dating site, they may have chat history between the consumer and a potential date, or if it's a campsite, they may even have cam to camp, which we have submitted is one of my favorite. One of my favorite methods of proof is when we have cam the cam evidence of a consumer using the product,

Speaker 2 (14m 41s): I love it. I love it. Now, how can adult merchants prevent unrecognized transactions? It's a real challenge since adult merchants have to be somewhat discreet and what descriptors go on a customer's bank statements, you know, for instance, it's, you know, XYZ Inc or whatever.

Speaker 3 (14m 60s): Sure. I mean, the answer is that they, once they, on, once the consumer goes to the URL, first of all, they should all be using a URL in their descriptor so that the consumer has a destination to go to, to resolve any disputes that they might have with their transactions. And, you know, you through some very basic, like email and last four of the credit card, they can see all their transaction history.

And if they want to cancel their membership, they're able to do so. Or if they want to dispute their last, their last month of a member ship, they're able to do so for their last token purchase, whatever it is, you give them electronic means to dispute those things. And oftentimes it's better just to refund the last transaction and, you know, keep everything else. Got it. That's step one. And I was gonna, I was gonna say as well, there are a number of tools that they can use to help prevent fraud, such as AVS check, which is address verification.

Right. You know, you can make sure that the address that they're entering on the credit card page matches the same one on their, on their billing page, on their building profile with their issuing thing. Right.

Speaker 2 (16m 25s): Okay. Anything else?

Speaker 3 (16m 26s): Yeah. I mean, there's, there's, there's 3d secure, which we're messing around with, as some people know, 3d secure doesn't protect adult transactions with visa. It does on MasterCard. I hope that's true. I always get that confused, but I know that 3d secure 2.0, looks like it's going to work across the board for all adult transactions. So we are playing with it. But if we are, it does result in increased declines, which a lot of merchants don't like, obviously.

So we're trying to balance out the 3d secure protection along with making sure that we're giving the merchants as many transactions as possible.

Speaker 2 (17m 8s): Well, yeah, I mean, you decrease your declines, but you also, you know, to greatly decrease your chargebacks in the long run, you could be out of head, right?

Speaker 3 (17m 18s): Well, that's the balancing act, right? I mean, if you, if you want to minimize fraud, you can decline every single transaction. You're going to have no fraud and have no business. So what we do is we try and we try and accept the mouth, some amount of fraud while maximizing the revenue. So there's an inflection point that happens in the data where you'll be like, okay, if we, you know, let's say we turned off AVS, and now we're getting a whole bunch of approvals, but the chargeback is too high.

Then we'll turn AVS back on for a merchant. I mean, okay, that's an acceptable level of fraud where we're mitigating. Most of it, our chargeback ratios are women acceptable levels and away we go. And that's sort of what we're, where we specialize is helping merchants really maximize their dispute prevention while at the same time, I think their revenue, it is not, you know, even though we are in the business of selling fraud prevention data, it is not our goal to sell as much data to our consumers.

It is our goal to sell them only the data that is relevant for their business.

Speaker 2 (18m 29s): That's awesome. Now you've obviously been in this industry for a long time and you've, you've had your own sites for a long time. What kind of an advantage does that give you in dealing with other site owners about their charges?

Speaker 3 (18m 44s): Well, I think that, you know, some of our competitors have never been merchants, so they don't actually understand all the costs that go into running a website, like affiliates, traffic, customer support, you know, they're not, they're not trying to, and we also understand that merchants are trying to maximize their retention revenue to maximize, you know, everything. And we, because we understand every single factor that goes into running a successful affiliate type business or friggin affiliate business and a successful e-commerce business, I make, it puts us in a position to understand our merchants predicaments.

You know, oftentimes we tell our merchants, for example, that we know that the affiliates have to get paid first, right? Cashflow comes into account. If we could help our merchants out, we're more than willing to help our merchants out by telling them that, you know, you have to pay the affiliates first. And I understand that. Sure.

Speaker 2 (19m 49s): Now give us the lay of the land in dispute management. The sick this sector has seen a lot of changes in recent years, who were the key players. I mean, obviously the card networks, visa and MasterCard, but they're, they've also brought, they're also brought in on the dispute space as well. So tell us a little more about that.

Speaker 3 (20m 10s): Obviously dispute management starts with, with the card schemes, visa, MasterCard, American express discover may have recently acquired a couple of companies. MasterCard bought a company called Ethica and visa bought a company called verify. We were, we started off as resellers of both Ethica and verify and with their recent acquisitions, by the card schemes, we are now direct partners with visa and MasterCard visa, and MasterCard don't have a relationship with merchants or consumers.

They have a relationship with issuing banks and acquiring banks. So what that means is that these are MasterCard are going to push these products out to consumers, through the issuing banks and to merchants through the acquiring bank. So recently we have built products to help, to help acquiring banks connect these products to merchants. So acquiring banks, for example, have no idea how to connect to a merchant CRM, but we do it helping a client thinks, you know, visa and MasterCard have been asking, acquiring banks to deliver these products to their merchants.

And we've been helping the acquiring banks become able to do so through a white labeled our system or through an API integration, or are we do the back office support or the acquirer or the ISO? We do it a number of different ways.

Speaker 2 (21m 40s): Okay. Now is everybody in adult considered high risk? And if so, why is that?

Speaker 3 (21m 46s): Yes, everybody in adults is considered high risk. The answer is very simple. The, the number of disputes in our space is higher than it's higher than the norm. Sure. Visa and MasterCard consider the norm to be a card present transaction. So any card not present transaction is considered a little bit higher risk, but you know, adult is obviously high risk. We are, we have to pay a high risk registration fee to build these and MasterCard.

And that is not going to go away anytime soon.

Speaker 2 (22m 24s): Okay. Now what are some of the, oh, I'm sorry, go ahead. This is true. Now, what are some of the common pitfalls or mistakes that high risk merchants get into?

Speaker 3 (22m 37s): They can get into taking aggressive traffic from aggressive affiliates, you know, affiliates who are maybe not telling the entire truth to a consumer, something like saying, you know, join this site and you'll get a million movies. And then the consumer joins the site and there's only 10 movies in the site, for example, well, that's going to lead to a dispute, right? Because the consumer was promised something that wasn't there. Yes. Right. Or they go to, or they go to buy a product and the login information takes 24 hours to get to them.

Well, in our world, these guys are looking for instant gratification. So that information better be there in seconds after them putting a credit card. Yeah.

Speaker 2 (23m 27s): What else

Speaker 3 (23m 28s): On answering, not answering a pay support email within a few hours, right. Having, having a consumer call a support number and being put on hold for 20 minutes, those are all things that are going lead to that are gonna lead to disputes and therefore charge. Okay.

Speaker 2 (23m 48s): Now what kind of ROI should merchants expect from chargeback helps dispute management.

Speaker 3 (23m 55s): Interesting question. It's hard to, it's hard to quantify. I'm going to do my best. Okay. So it really depends on the level of interaction or the level of proof got the merchant has four between the consumer and their product. If it's a physical goods product and the merchant is diligent about showing the shipping information and they're requiring a signature on shipment while we win 90%, if it's, if it's a very aggressive dating, dating merchant and the level of interaction between the consumer and the product is minimal, we're going to win 30%.

So it's, it's a wide range. And really, it really depends on, you know, the level of data, how much data the merchant can show us that shows the interaction. And again, to the interaction between the consumer and the product, that's the most important thing. Okay. And we can show the consumer's bank that they use the product. It was them that made the transaction to them. We're going to win most of the time.

Speaker 2 (25m 6s): Yeah, no, there's been a lot in the news lately about, you know, through the whole series of articles in the New York times, for example, and mine, geeky when lost, they're processing it for a, for a brief time. So based on all that, what is the future of high-risk processing look like? Especially in the adult space,

Speaker 3 (25m 29s): It is my opinion that in the adult space, we should, we should, you know, let's let these stories just go and help that they get buried. I think that the worst thing we can do is talking about them and, you know, and even ask for dialogue between the card, schemes enough. Yeah. The card schemes know we exist. Right. We need it. We need them a lot more than they need us. This is true. They would, they wouldn't like these stories to just go away.

They don't want to be, they don't want to be tied to, or have, or be forced to make a decision on anything. No, it's true. You know, they make good revenue from it, but they don't need it. If it becomes a PR problem for them, they will dump it.

Speaker 2 (26m 16s): Okay. So basically the bottom line is let's keep our noses clean so they don't have more reasons to dump us.

Speaker 3 (26m 23s): Exactly. Okay. We are right. Those again, the witch hunt against, against PornHub was nothing a foreign pornhub's doing there. It was, you know, about article, right?

Speaker 2 (26m 38s): Yeah. A couple bad articles actually. And yeah.

Speaker 3 (26m 43s): With a lot of line.

Speaker 2 (26m 44s): Yeah. You never heard back. That's true. One, one merchant, I'm sorry. One, one writer seeming to have a vendetta against the industry

Speaker 3 (26m 55s): For years.

Speaker 2 (26m 55s): So how can merchants get in touch with you?

Speaker 3 (26m 58s): Pretty easily hardback health.com. We have a contact form on our website as well. They can email me personally, Raja R a J a@chargebackhealth.com and can be found at most trade shows, buying drinks late at night.

Speaker 2 (27m 17s): Yes. I know about that part. So Raja and I hope we'll be seeing each other at those trade shows soon, counting on, on Prague happening live. I guess they just did more. So the chances are

Speaker 3 (27m 34s): Got a couple of guys. We had a couple of guys in . They had a good time. The show was fruitful. I am, I'm going to be in New York or affiliate summit east next week, July 15th through 20th. And then, and then I'm planning on being at the, at the shows in, in the fall. I'm a little sad this year that there is no October Fest as you may or may not know. I look forward to that every single year, but 2022 will be a bigger than usual.

I hope

Speaker 2 (28m 9s): We're all, we're all counting on it. Well, Hey, I'd like to thank you once again for being our guest today on adult side broker talk, and I hope we'll get a chance to do it again really soon.

Speaker 3 (28m 19s): Thank you very much, Bruce. I really appreciate it.

Speaker 1 (28m 22s): Thank you. My broker tip today is part four of how to buy an adult website. Last week, we discussed making an offer and deciding the best price for the site you're buying. Once you've made your offer. The work really begins. If you're working with a broker, like say, oh, I don't know, maybe adult site broker, we handled the negotiation for you. Let's say the seller doesn't accept your offer. They may make a counteroffer. If you decide that you're willing to pay more, you can either accept their counter offer or counter back to them.

A good rule of thumb is to always leave room to negotiate. So don't make an offer. That's the absolute most you're willing to pay. If you do that, then you have nowhere to go. If the owner counters your offer, once the owner and you have come to a deal, then it's time to do some due diligence beyond what it is you've already done. During the initial process of looking at the site, you should have asked some questions like in the case of a pay site, how many joins and rebuilds there are per day and any other pertinent questions during due diligence, you need to make sure everything is where you need it to be technically to integrate it with what you're already doing.

You may even get your developer involved. If you're not tech savvy, you and your developer should ask those pertinent questions. Once those are answered to your satisfaction, you should either have the seller or yourself drop a sales agreement. I always tell my clients to pay an attorney and to do the agreement. Why? Because that way you can dictate the terms. So whether you're the buyer or the seller, you make the rules, however, just be ready to have the seller's attorney changed. Some of those rules, nothing is final until everything is signed off on.

Another thing we do for our clients is to do a letter of intent prior to the sales agreement being done. This gives your attorney a roadmap for the agreement, the letter of intent and more so the agreement will have all of the terms involved, including who pays for everything who pays for escrow. For instance, this can be paid by the buyer, the seller, or split between both parties. We'll talk about this subject more next week and next week we'll be talking to Claude from X10.

And that's it on this week's Adult Site Broker Talk. I'd once again like to thank our guest Raja from Chargeback Help. Talk to you again next week on Adult Site Broker Talk. I'm Bruce Friedman.