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Chargeback Prevention Starts with Fraud Prevention

Dollar sign with arrow around icon vector, filled flat glyph, solid colorful pictogram isolated on white. chargeback symbol, logo illustration

Chargeback prevention is one of the foremost concerns of online merchants. It’s always galling to have to send money in the wrong direction, and it’s even worse when the reason for it is outright fraud. With fraud, you’re not only out a sale but often, you lose your merchandise as well. Fortunately, there are ways to catch most of it before your products hit the shipping stream.

Use a Merchant Account with Fraud Prevention Tools

A merchant account that offers the right settings will, when those settings are properly tuned and activated, do much to increase your chargeback prevention success. Some of the typical options include automatic checking of the delivery zip code against the zip code of the credit card holder’s billing address, checking the card number against a database of stolen numbers, use of the Cardholder Dispute Resolution Network, instant notification of payment disputes, and more. The Cardholder Dispute Resolution Network is a fairly new system that allows chargeback and dispute information to be shared between card issuers and merchants and can let you spot a serial refund-seeker before you complete a transaction.

Manually Check Any Suspicious-Looking Order That Gets Through

Sometimes, even the best automated systems aren’t enough. This is why you should always check strange-looking orders – especially those for unusually-large amounts of merchandise – for fraud. Check Google Street View to see if the destination address is a vacant lot, look up the phone number the customer gave you as well as calling it, and check the origin area of the IP attached to the order.

These are some of the best ways to prevent online ordering fraud and the chargebacks that go with it. If you need a merchant account that will automate much of the work, just contact us. Our Chargeback Defense system is just what you need.

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Preventing Fraud Related Chargebacks Is Essential In E-Commerce

Woman in a cafe on laptop, holding credit card. worried about chargebacks

From time to time, chargebacks are an unavoidable part of being a merchant — like returns and customer complaints. Chargebacks are much more costly to your business, however, and while you might not be able to avoid them completely, you should be taking steps to prevent as many as you possibly can.

As we see criminals becoming more sophisticated and cases of online theft and fraud rising, it’s more important than ever for e-commerce stores to protect themselves from chargebacks related to fraud.

Verify that information.

It can be hard to ensure the person using a card online is really the person who owns the card — unlike face to face transactions, it’s a lot harder to simply ask for an ID and make sure names and faces match.   Many payment gateways handle these processes automatically.  There are still steps you can take yourself to reduce chargeback fraud, however.

  • Collect all of the customer’s information — Full name, billing address, billing phone number, and shipping address.
  • Use the Address Verification System (AVS) to make sure the provided information is valid.
  • Use the security code on the back of the card to authorize the transaction — this is usually 3 or 4 digits, depending on the card issuer.
  • Use a delivery service that requires signatures, especially for high-cost items or sales.
  • Have a clear policy in place about shipping to addresses that don’t match the billing address. For example, if you sell a product that’s commonly shipped as gifts to other people, make sure you’re still protecting the paying customer.

You can also consider recording customer’s information such as an IP address or device ID when processing online purchases, which will help protect your business and provide vital information for investigations should a fraudulent transaction occur.

It’s wise to also be cautious when shipping and receiving orders from overseas, or when you’re processing transactions that are much larger than usual — make sure you’re taking steps to verify all the information is valid.

Keep communications open.

While sending your customers emails about every step of the shipping process may seem a bit pushy, it’s actually a wise idea. Letting your customers know what’s going on with their order not only keeps them abreast of the situation, but it also shows them that you’re paying attention to them and they matter to you as a customer.

Follow up emails and phone calls can also help catch fraudulent transactions before they get too far. Getting an email or a phone call right after a purchase occurs can alert a customer to stolen information immediately, which will allow them to work with you and their card company to handle the matter quickly and efficiently. If they don’t see it until their card company alerts them to fraudulent purchases OR they see the charge on their bill, well, here comes the chargeback!

Working with the right merchant services provider can help you automate these steps, which will save you time and money, protect your business, make your customers happy, and give you peace of mind. You’ll never be able to prevent ALL chargebacks, but that doesn’t mean you can’t take steps to keep those numbers and costs as low as possible.