Protect Your Business From Chargeback Fraud
The boom in e-commerce businesses over the past few years has provided thousands of entrepreneurs with a never before possible opportunity to launch retail spaces with a minimal overhead, benefiting a range of small businesses from resellers to artisans in various niches. Unfortunately, like many innovations in retail, it has also brought with it a new set of hazards, including new forms of fraud that cost merchants a lot of money every year. Ecommerce fraud is hardly new, it’s been around as long as the internet has hosted remote businesses. It is always changing, though, as fraudsters work to take advantage of new loopholes every time merchants and card issuers find ways to close old ones. Today, one of the most common forms of fraud is abuse of the chargeback process, and successful merchants need the tools to track and challenge those abuses.
Intentional vs. ‘Friendly’ Fraud
The laws allowing consumers to initiate chargebacks were written at a time when credit cards were pretty much only used for in-person transactions, and they were built to protect consumers from fraudulent charges, not necessarily to protect merchants. As a result, the rise in internet shopping has led to a rash of customers who mistake a carrier delay or misplaced package for a missed shipment and then use the chargeback system instead of communicating with the seller to resolve the issue. Often, the package turns up later, resulting in the merchant losing money and the customer inadvertently getting both their money back and the merchandise. This so-called friendly fraud is a problem, but so is the abuse of this process by those who make a pattern of it, acquiring goods for resale elsewhere in like-new condition. While the former may be a mistake, the latter is intentional fraud, and it is a crime.
What’s the Answer?
Protecting consumers without shorting merchants is possible, it just takes communication between all parties. Since you can’t control when a customer will get nervous and initiate early chargeback requests, the key is to have the toolkit to respond to them in an organized way, with actionable intelligence you can use to support your company’s case. The right chargeback management system can help you with tracking and documenting disputed chargebacks, while also providing an archive of data that helps you better identify those who abuse the process on a regular basis.
Until the law changes, it’s up to merchants, cardholders, and card issuers to work together and make sure that chargebacks are used to defend against fraud, not as a vehicle for committing it. This is a challenge on today’s internet, but it’s hardly the first time fraud has challenged online companies. Get the tools you need to get your work done today.
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