The advent of eCommerce has revolutionized the way businesses function and how consumers make purchases. The digital marketplace is expanding rapidly, and this transformation is ongoing.
Yet, there continue to be difficulties that arise from this evolution. One of which is a fraudulent activity like chargeback fraud. It presents several challenges to organizations today.
Friendly fraud is another term used to describe such criminal events. This is where customers dispute their credit card purchases. They do this even after receiving online goods or services. Overall, this often leads to significant damage to a company’s financial health and reputation alike.
For example, a customer orders XYZ from any e-commerce platform (like Flipkart) and pays via credit card. Later, even after receiving the product, they raise disputes. This is what we call today’s time e-commerce and chargeback frauds or friendly frauds.
However, there are various ways for businesses to deal with this issue. We can talk about that later in this blog. But let us begin with the details about e-commerce chargebacks.
What is an e-commerce chargeback?
Do you happen to be familiar with e-commerce chargebacks? If you need help, let me explain. Speaking -chargebacks occur whenever someone buys goods or services online and challenges that purchase for some reason. (With invalidity often being cited as one of these reasons).
Credit card companies might side with these customers, too. They give them refunds out of merchant accounts without investigating claims first! For merchants like yourself- this means loss. You will lose both revenue opportunities and fees incurred from the chargebacks themselves.
Three parties are involved in chargeback transactions:
- customers who claim that their purchase was unfair,
- retailers who sold them those goods/services and
- banks that handle payment processing between these two groups.
Charging your account if problem-solving doesn't work out is always possible. So be aware of this problem through careful monitoring!
What is the present e-commerce chargeback rate?
Understanding an average e-commerce chargeback rate can take time and effort. Many variables, such as product type, sales history, and industry niche, influence this metric.
A widely accepted standard within the e-commerce community is to keep your chargeback rate under 1%. Leading credit card processors have established this benchmark. Further, exceeding it earns the unwanted label of “high-risk merchant.” Businesses with significant credit card handling companies can be challenging when labeled as high-risk.
Therefore, many companies strive to minimize their chargebacks even less than the industry-mandated benchmark of one percent. Comparing performance against similarly situated businesses can provide helpful insight. This will give you an idea of how effectively you manage your organization's risk profile from a financial perspective.
8 Ways to tackle e-commerce & chargebacks fraud
Even though it might not be possible to stop eCommerce theft completely, stores and brands can take steps to reduce it. They can do this by catching false signs early and taking steps to stop them right away. It's also essential to fight false refund claims quickly and effectively to keep losses from theft to a minimum. So, eCommerce sellers should think about using these best practices to stop refund fraud:
1. Implementing Reliable Fraud Detection Tools
Card networks use real-time ARPs to answer questions from customers. Businesses need to clear up misunderstandings among users and cut down on scams. A reason code is assigned to each chargeback to communicate the reason for its issuance. Retailers can benefit from tracking these codes as they offer insight into why they occur in the first place.
Using dependable anti-fraud resources like Chargebacks911 can bolster your safeguard against eCommerce fraud. This top-tier provider offers full-service chargeback management and bright source tracking to zero in on what causes chargebacks. This gives businesses the tools they need to stop scam attempts. In addition, Chargebacks911 looks into every case of a chargeback and provides a custom answer by using both human and AI-based methods. To grab more information, explore Chargebacks911.
2. Clear communication with customers
Unclear Return Policies can lead to disagreements between customers and retailers. Proactive communication between retailers and customers through different methods can help avoid conflicts. The first step is to develop clear Return Policies that are easy for customers to understand. To avoid arguments, stores should have buttons on their check-out pages where customers can confirm that they agree to the rules. Communication methods that work well are easy to use and respond quickly, which makes customers happier.
3. Deploying Multi-layered Security Measures
Don't let cunning fraudsters slip through the cracks – fight back with multi-layered security tactics! Clean fraud is tough to catch because thieves know enough about their victim's cards to avoid tools that look for copies.
But don't give up! Businesses can stop this fraud by using an AVS, checking the CVV on every buy, and tightening customer authentication procedures.
4. Ensure Transaction Accuracy
Merchant blunders such as double-billing or inaccurate amounts may lead to chargebacks. Therefore, verifying transaction accuracy is fundamental in mitigating these consequences.
Chargeback risks caused by store mistakes can be kept to a minimum using reliable payment processing technologies. In addition, businesses can resolve customer issues quickly through excellent customer service.
5. Improve Customer Service
Customers who have good reasons to ask for chargebacks. People who disagree with what they bought often say it's hard to talk to store customer service reps.
To solve this problem, customer support staff should have communication skills. They need to learn how to distinguish between real and fake claims and how to understand why clients are upset.
Examples of valid claim categories encompass situations involving
- purchases made without cardholder authorization by family members or minors.
- Fears of card fraud and theft.
- Buyer's remorse results in changed minds about the product purchased.
6. Regular Audits
By employing regular audits, merchants can stay on top of fraudulent activity like triangulation scams. These happen when thieves get credit card information and use it to buy things from actual stores. But instead of having the items shipped to them, they send them to someone else (often without the recipient's knowledge). To combat this fraud, businesses can also monitor their customers' ordering habits for any red flags. Moreover, they can use secure payment gateways.
7. Ship Right Order & On-Time
It's common for mistakes during packing and sending products to trigger chargebacks later on. Unhappy customers may then point out problems! It can be either item quality or delivery promptness as contributing factors. So your best option will consistently be reducing the chances of chargeback! You can do this by making sure that orders go out on time. Also, please ensure these orders are safely packaged when delivered accurately to final destinations.
8. Maintain A Consistent Brand
It's crucial for businesses seeking to build strong relationships with their client base. This helps to ensure consistency across all transactions – including how they bill their customers.
Avoiding differences can eliminate potential questions about authenticity. Further, it will keep confidence levels high among buyers and sellers alike. Please ensure transparency when using another name for payments or bills. Any business can do this by communicating any differences ahead of time.
To keep things running smoothly during transactions, always double-check! Could you check if your billing identification provides clarity?
eCommerce is a high-stakes game! But chargeback frauds present a significant challenge to businesses. But that's no reason to throw in the proverbial towel.
Companies can continue to succeed in their online business ventures by adopting effective ways and using powerful tools. Further, they don’t need to have a fear of falling victim. It boasts innovative technology capable of outsmarting even savvy scammers. Ensuring they stay ahead by keeping up with cutting-edge developments in fraud prevention is also crucial.