The intentions of the minds behind the chargeback system were obviously the fairest. Nevertheless, the very system has soon become a great environment for fraud, losses caused by it reaching almost 1.5% of the total merchants’ revenue. While there are companies specializing in chargeback prevention, there are things you as a merchant can do yourself to prevent these losses.
Why are chargebacks so attractive to fraudsters? Probably the answer lies in the very history of it. Originally, the chargeback procedure was developed in the 1980s, when credit cards were just on their way to popularity, and the Internet was nowhere to be seen. Now the scoundrels are better armed; the good news is that so are you.
What to Do with Chargeback Fraud
There are some basic recommendations that will help you realize the nature of chargeback fraud and handle it better. It may require some expenses, but the losses you prevent will pay for it.
1. Know Yourself
While this part does not directly address the chargeback issue, it can help you indirectly when it comes to disputes. In order to get your side as protectable as possible, your policy should embrace the following approach:
- Get yourself described. If your merchant descriptor is comprehensible, it remains in the transaction history not as just an unnamed payment, but with a name and a purpose. This diminishes the risks of friendly fraud and makes real fraud cases more obvious.
- Get yourself and your customer to sign contracts in person. A purchase should involve an agreement that the customer is supposed to sign. Of course, it makes sense when it comes to larger amounts, not just ordering a pizza or a T-shirt. But bigger money attracts more fraudsters.
- Deal with issues as quickly as possible. Being customer-friendly adds up to your reputation, so in disputes, the decision will probably be in your favor. If suddenly a mistake happens and it all goes public, the more satisfied customers you have, the less your reputation will suffer.
2. Know Your Customer
Yes, we mean the KYC system that requires customer identification and storing data about them, so you can provide it when it comes to disputing the chargeback request. Usually the basic data is provided by the payment provider, but you should also collect what’s possible from your online interaction. You should also pay more attention to tracking your orders. Armed with the purchase and delivery reports, you can deny false chargeback requests, whether fraudulent or friendly.
Given all this, you should provide an easy way for your customers to contact you 24/7. Provide your phone numbers, mailing address, emails, messengers, web chats. And, of course, people who will handle that when bots fail. So…
3. Know Your Staff
It’s not enough for you to know it all. If you have even one employee responsible for managing the online transactions, you should have them instructed on how to handle these situations. It may cost you some money, but it does pay.
Not only should the person in charge know the procedures and protocols and apply them. They should keep all the systems working, all the third-party services connected (you will need them anyway), and the customers as satisfied as possible.
4. Sift Friendly Fraud and Prevent It
Not all chargeback requests are really fraudulent. Some of them are caused by forgetfulness, delivery issues, or quite fair reasons. That’s where direct contact with your customers pays. First, you can calm them down by providing details on the items being delivered. Second, providing your merchant profile will make the details of your deal visible to them on the transaction list, so they will read it from the message sent by their bank.
5. Decline Suspicious Transactions
It’s better to prevent the transactions that may be followed by chargeback at all. That’s why special smart detection systems exist. They consider everything: the name and the card number, the time of purchase, the device the customer uses, their location, and everything that can be analyzed. If there are any signs that the card is not used by its owner (or not used properly), it is recommended to decline the transaction. Or it’s declined automatically.
You’re in Charge!
As you can see, most of the steps you can take to prevent chargeback fraud are full of other benefits, so following them makes you better as a merchant. Share this on Facebook or Twitter for your friends and subscribers to benefit from this too. Or leave a comment with your own experience you’d like to tell the world.