Card-not-present fraud will cost businesses £6 billion within two years according to research by AITE Group. Chargebacks make up a large part of this worrying trend.
However, many merchants and issuers tolerate, admittedly with reluctance, the losses.
Monica Eaton-Cardone co-founder and CIO of Global Risk Technologies™ believes that there are ways to counter the threat of friendly fraud effectively. In this article Monica outlines ways to start reducing your chargeback problems.
You can fightback against chargeback fraud.
You would not tolerate someone coming in off the street and stealing, so why would you let fraudulent activity take place online? Here are 8 tips that will start reducing those unacceptable losses now.
- Get your basics right: logistics
If the consumer does not receive the correct product that they ordered, the merchant is likely to lose the item they’ve sent out as well as the refund and chargeback cost. Make sure your ordering systems and delivery do just that: deliver.
- Learn from your experience
What specific chargeback issues do you have? What are the reasons for chargebacks? When you have challenged fraudulent chargebacks, which approaches proved successful? Where are the trends?
You need to keep a system of noting this information in order to develop effective policies and act on them.
- Look for unusual activity
Keeping alert for unusual activity can be highly effective.
Are order volumes particularly high, especially for expensive items of the same type or brand and does the location of the transaction tie in with the billing address? They might be legitimate purchases, but you can make that call more confidently if you and your team look for unusual purchases.
- Make your customer service work for you
Chargebacks are often initiated when customers feel they cannot recover their money through a company’s customer service department.
When a customer starts a chargeback process, you only have 7-10 days to dispute the claim. It can be effective to contact the customer and find the reasons for the chargeback. Customers might withdraw chargebacks by contacting their card issuer, so trying to resolve the issue could be highly beneficial, not to mention good PR.
- Be available at all times
Customers are not known for their patience and if they cannot contact the merchant when they want, they may well contact their bank instead and instigate a chargeback.
If you do not operate a call line 24/7, make it clear when your business is open to handle issues.
- Clearly display your policies
Following on from the above point, if you prominently display online your refund policies and contact information you can prevent buyers from feeling powerless and this might encourage them to not be rash in lodging a chargeback.
- Make your case with the banks
Keep your records, from the order to the delivery confirmation, in order and provide them to banks promptly if a chargeback claim is initiated.
- Examine reason codes
When you receive a chargeback, it will have a reason code. Each code, which varies by card issuer, will indicate the reason for the chargeback. The code will give you the chance to investigate the transaction to spot irregularities. It is all useful in building up a picture of what is causing the chargebacks.
Follow these steps with conviction and you will be on your way with reducing the problem of chargeback fraud.
Monica Eaton-Cardone is Co-founder and CIO of Chargebacks911, part of Global Risk Technologies™.
As well as offering software solutions to reduce chargeback fraud, Monica provides education and consultancy to merchants who no longer want to see chargebacks stealing from their hard work success.
