On occasion, we get asked why WidgetMakr won’t accept donations under $2. While it’s true that aggregate sums of donations under $5 can raise significant amounts of funds over the course of a campaign, donations of $1 or less are very uncommon and increasingly being used in credit card fraud. They also tend to cost the campaign more than the donation itself due to the cost of fundraising and credit card processing fees.
WidgetMakr intentionally enforces a minimum donation of $2 because transactions under this amount are frequently used to test if stolen credit cards numbers work. Setting this security standard is a simple but effective way to prevent fraudulent transactions on our clients’ donation pages.
In the aftermath of security breaches at Target, Home Depot and the Federal government, online retailers are ramping up security measures on their websites to prevent fraud. This has spurred thieves to use the websites of political campaigns and nonprofit organizations to see if a stolen credit card number is active by making a small donation of $1 or less.
They use these websites because donations are easier transactions to test with. You don’t have to setup and account, you don’t have to get a physical item shipped, and charitable organizations less often verify billing address.
Credit card fraud not only hurts donors, but it can be devastating to both the reputation and budgets of campaigns and nonprofits. Whenever a fraudulent transaction is made, credit card companies – such as Visa, MasterCard, American Express and Discover – charge the merchant a chargeback fee.
A single chargeback fee typically costs between $10-$25 per transaction, which quickly adds up if a criminal targets a particular organization or campaign to test stolen credit card numbers. For example, in 2013, a charity in Ireland refunded and paid more than $170,000 in fees and fraudulent charges.
While our minimum donation of $2 might be frustrating to a very small group of people who want to make gifts of $1 or less, it goes far in protecting both our clients and donors from being the victims of credit card fraud.