When an unauthorised transaction has taken place, many consumers go directly to their bank to report it, rather than the online retailer. This begins a costly chargeback process that often means the retailer loses the value of the goods sold, the up-front cost of reimbursing the customer for the items they didn’t legitimately purchase, a penalty fee and reputational damage.
Chargebacks can be caused by fraud, processing errors or problems with card authorisation, but the burden of proof usually falls to the merchant. To this end, processes must be efficiently documented and merchants need to establish a close connection with genuine customers. Then, if identities are used fraudulently, the merchant is prepared to react quickly and effectively in direct conversation with the victim to help resolve the issue as smoothly and as quickly as possible.
The number of identity theft victims in the UK surpassed 32,000 in the first three months of 2015, up by 31% compared to the same period in 2014. According to a recentBBC News article, criminals are increasingly using internet forums to buy and sell identity data, including payment information that can be used fraudulently online. This directly impact chargeback rates for merchants across the country.
Personal information needed to make fraudulent payments such as names, dates of birth, physical addresses and email addresses are being obtained by fraudsters and shared via these ‘fraud forums’ and the negative effect is being felt by consumers and businesses alike.
Fraudsters often obtain these identity details via hacking or phishing techniques that fool people into using a fake website that steals their private information. The problem is exacerbated by a lack of education among consumers, who often use the same password across multiple accounts, making it easy for fraudsters to visit multiple sites and complete fraudulent transactions.
Typically, these transactions will be high-value purchases as the fraudsters try to make as much profit as possible before the consumer notices and contacts the authorities. By the time the consumer notices, it’s often too late and the damage is done.
The process following an account breach should begin with the customer taking the necessary steps to secure their accounts again with stronger passwords and limit the damage the fraudsters can perpetrate as soon as possible. If they identify transactions that have been made in their name, without their knowledge or consent, they should contact the retailer and work with them to provide details that can help resolve the breach. The merchant’s job is to make this line of communication with consumers as clear and easy as possible to resolve and remedy genuine chargeback situations.
