When fight chargeback fraud, merchants need to take a proactive approach and rely on chargeback prevention software that can catch suspicious orders, such as high-velocity ordering, orders that are uncharacteristically large based on historical activity, or shipping a large number of the same product to the same address. However, even when an eCommerce business has a sophisticated fraud detection system in place, it can still face disputes and chargebacks, which are the result of customers disputing a transaction with their bank or credit card issuer.
Shielding Your Business: A Comprehensive Guide to Fighting Chargeback Fraud
Some types of dispute are more likely to be fraud, such as criminal fraud, where a cardholder has stolen the physical card or infiltrated their account with fraudulent credentials to purchase goods and services without authorization. However, there are also honest disputes that may be less likely to be fraud, including buyer’s remorse, family members making purchases on a shared credit card, a mistakenly billed service and more.
Regardless of the cause, each transaction reversal causes financial losses for a business, including refunds and fees paid to a payment processor or credit card network, as well as a negative impact on a business’ reputation and future sales. Moreover, frequent chargebacks can lead to a business losing its merchant account with the card networks, which can make it difficult or impossible for businesses to accept credit cards.
To successfully fight a chargeback, merchants must have detailed documentation and a strong rebuttal letter that shows the transaction was valid. The process can be lengthy, and any time spent fighting a chargeback is time that a business could be spending on growing its customer base, developing new products or services and focusing on customer retention.