Combat Chargeback Fraud as E-Commerce Surges in Popularity

It’s no secret that e-commerce has expanded rapidly in the last few years, which means the time to combat chargeback fraud is now.

The e-commerce trend has only been accelerated by the impact of the COVID-19 pandemic.

Many of even the most traditionally minded established bricks and mortar businesses have been forced to develop an online presence and to offer such innovations as “buy online, pick up in-store (BOPIS) if they wish to compete in the new marketplace.

But most have been pleased to do so as the commercial opportunities offered by the trend towards online shopping are immense.

The Problem with E-Commerce 

But perhaps the only downside of the e-commerce boom is that it has also offered significant new opportunities to the unscrupulous and ingenious fraudsters and chargeback misusers who continue to plague honest merchants and customers.

How to Tackle Fraud and Chargebacks

The good news is that there are a number of practical measures you can take to minimize this problem while continuing to enjoy the increased revenues that e-commerce offers.

1. Prevention

Prevention is always better than having to dispute a chargeback or meet the cost of a fraud.

So the first step should always be to implement a full suite of anti-fraud measures such as payment card verification values (CVV) numbers, address verification (AVS), 3D Secure 2.0 and other methods of multi-factor authentication.

Today’s Artificial Intelligence (AI) and machine learning systems are also invaluable in allowing the pre-emptive identification of bad actors and potentially fraudulent purchases.

Friendly Fraud

So-called “friendly fraud” chargebacks, however, are difficult to prevent by such measures, and the best defense will be a rigorous process of optimizing the customer experience.

In practice, this means implementing open, transparent, and preferably generous shipping and returns policies as well as excellent customer communications.  

2. Challenging Filed Chargebacks

But in the unfortunate, but all too common, case that a chargeback is filed in spite of all the above measures, it may be necessary to contest the disputed transaction.

This can be difficult, time-consuming, and expensive, particularly in the case of e-commerce. Almost by definition, this involves “card not present” transactions, which ae able to sidestep many of the preventative measures outlined above.

And the process is deliberately designed to favor the customer.

Nevertheless, disputing transactions is essential both to protect your revenues as far as possible, and to deter “friendly” fraud repeat offenders.

Talk to Us

By far the best way to challenge unfair or dishonest chargebacks is to have in place a clear plan for the collection and analysis of relevant data, comprehensive staff training, and a clear understanding of the grounds on which a chargeback can be successfully challenged.

It’s not an easy task, especially for smaller merchants and those new to e-commerce.

So why not start by contacting our expert team here.

We’re dedicated to helping businesses of all kinds to put place exactly the package of measures they need. And we look forward to working with you.