[PSA/Article] How to protect yourself from fraudulent customers and legit losses

The self insurance method. Legit; You sell only one product for $100 each. You realize that on average one shipment is lost/undelivered/seized for every 20 shipments.

Increase your price by $105,26 and never spend the extra $5,26, put it on a separate account called self insurance. So that every 19 shipments you can fully afford a lost one and even reship it to customer if the case is legit.

Fraud; You get an average of 100 orders per month. Again your product costs $100. Out of 100 orders, on average 4 are disputed fraudulently.

Increase your price by $4,16 + $5,26 + 1% of $100, your product now costs $110,42. put the xtra $10,42 on a separate account called self insurance and never spend it. Now you can afford the fraud and black list the customer among all vendors.


Comments


[1 Points] drimilr:

are your numbers representative of what youve experienced?


[1 Points] Theeconomist1:

If you can get accurate numbers I think this is great. I assume once you get a few hundred orders out you'd have a decent representation. Actually maybe even around 100. I bet it also matters on product too. Certain products have more claims. Maybe even cities and states. Can we get an actuarian in here??


[1 Points] BrodhiRoundhouseKick:

Prove via a mathematical recursive proof that starts at 0 and goes to ~ (DAG I HATE REDDITS MATH DISPLAYS) and you might be onto something.


[1 Points] MXEMan:

But if your product sells for $100 and is lost, your actual loss is, hopefully, significantly lower than that (if it's not $50 or less, I'd suggest you're doing something wrong). I assume you're also talking about an actual account instead of a BTC wallet because unless your self insurance account is pretty substantial a decent swing in the price of BTC can wipe it out.

Honestly, your price should reflect anticipated loses already. In a retail environment, shrinkage is calculated into the price and jsut dealt with. There aren't separate cash acocunts to cover losses.