Chargebacks may be a good solution for both banks and customers, making it easier to protect them from fraudulent merchants. But how do merchants protect their business from chargebacks applied wrongly? There are ways to prevent fraud that, being applied to various sorts of chargebacks, can dramatically reduce the losses. They include fair trading and transparent data policy as well as specific anti-fraud measures.
Preventing Friendly Fraud
When your customer forgot about the purchase and claimed chargeback – that’s friendly fraud. When the wife took the husband’s credit card (or vice versa), and then the unaware spouse doesn’t recognize the purchase – that’s friendly fraud again. When the merchant descriptor is so unintelligible that the customer can’t realize what they have just paid for and requires their money back – that’s friendly fraud, too. These customers had no criminal intentions, yet they caused losses.
To prevent friendly fraud, you can do the following:
- Set up chargeback alerts. They will let you regulate the issue before the bank intervenes. This can save your reputation as a merchant.
- Make your merchant’s descriptor as informative as possible. When the customer’s bank notifies them about the transaction, it should contain the name of the merchant and the details of the purchase. So if the customer forgets, the notification is a reminder.
- Track the delivery. In case the customer claims the item hasn’t been delivered, you need to have an independent track history that proves you have shipped the right package at the right time. If anything happened on the way, it’s not your responsibility.
- Be available for customers to contact you. Negotiating can be the best way to solve problems between you and them.
Not that these measures will help you to completely eliminate friendly fraud: there will still be unpredictable situations. But they will reduce your losses significantly enough, maybe to keep your business afloat.
Preventing Criminal Chargebacks
Completely different is the situation with criminal chargebacks. They mostly happen after purchases made with stolen cards and identities. When the real owner gets aware, they often claim chargebacks, so they get their money back… from you instead of the criminal. There are ways to prevent most of these crimes, though.
The main recommendations may be these:
- Know your customer. According to recent laws, you should require information about the customer to conduct any financial operations with them. Use this data. Make sure names and street addresses match. Request the CVV code from the back of the credit card to make sure the customer has it.
- Use device fingerprinting. This technology analyzes details of purchases, no matter if they were made from a browser on a desktop or in a mobile app. Details like OS version, screen resolution, Wi-Fi network, location, device model, and even time zone will help detect whether the card has been stolen. It analyzes the data in connection, so numerous purchases from the same device with various cards can also be marked as potentially fraudulent.
- Pay attention to storing your customer data. It’s no pleasure at all to be the weakest link from which the data leaked.
Following these recommendations will reduce your risks and save both your money and your reputation.
Preventing Future Crimes
While online fraudsters get more inventive each day, the only way to stay protected from them is to connect professionals and use the services they offer. Not only do they react to threats that appear, but they also prevent non-existent ones by predicting them heuristically. Trusting pros is the way.
Did you like what you just read? If so, share it with your friends on Facebook or Twitter. We will be glad if you leave a comment here to ask a question or remind us of something we have missed. Are you looking for more blogs? then search on blogclus, Thank you for reading!
