Combat chargeback fraud fraud is a serious problem for merchants, but it’s also expensive. Not only do you lose transaction fees, but you lose the time and resources it takes to fight each chargeback dispute. This can cost you big in the long run and impede your growth. Fighting friendly fraud chargebacks can even impact your relationship with a bank or payment processor and lead to losing the ability to accept certain types of payments.
Friendly fraud is growing because of the increase in ecommerce and the ease of disputing transactions. Chargeback rules and regulations prioritize customer rights over business interests, which allows customers to file false chargebacks for illegitimate reasons. Additionally, many ecommerce companies don’t have the resources or expertise to fight these disputes, so they become an easy target for fraudsters.
Stopping Chargeback Fraud in Its Tracks: Strategies for a Secure Payment Environment
There are ways to combat chargeback fraud, starting with a robust fraud prevention solution. A good fraud detection system can screen your business’s transactions at different touchpoints, with machine learning, custom lists and rules, and digital footprint analysis. It can help you spot patterns that might signal friendly fraud, such as high-velocity ordering, orders containing a very large number of items, or wildly differing shipping and billing addresses.
Educating customers about the chargeback process and encouraging them to contact you first if they have an issue can also help. Additionally, offering clear product and transaction descriptions can deter mistaken friendly fraud charges. By implementing these strategies, you can reduce your chargeback rates and improve your chances of winning each representment case.
