Though some believe blockchain technology can rescue businesses from chargebacks and ecommerce fraud, it may not completely solve the problem.
True and friendly fraud hurt all businesses, especially mobile and online merchants. Unauthorized use of credit cards triggers cardholders to implement chargebacks, resulting expensive refunds and other penalties for businesses. As blockchain technology evolves, merchants can expect it to reduce true fraud, such as cases where stolen credit card information, is used. However, it may not be as effective yet in fighting friendly fraud.
Blockchain Shows Promise in Curbing True Fraud
Blockchain records transactions across a large volume of computers through its public, decentralized, and distributed digital ledger. The beauty of blockchain is that the way it is created prevent the ledger from being altered retroactively. This may be beneficial in prevent in trimming cases of true fraud because it is tough to pull data from a blockchain system. Limiting e-commerce fraud could cut down on chargebacks.
To date, it’s not as promising for cases of friendly fraud, which is when a consumer initiates a chargeback though they actually bought the product or service they are asking for refunds. This type of fraud is especially troublesome and expensive for merchants. The nature of these cases are just difficult to get a hold on, mostly because shoppers claim they never received an item, said the purchase should have been cancelled, or a family member bought something without permission.
Though blockchain continues to evolve and nobody knows what it could bring forth, it doesn’t look like it can help those chargebacks caused by friendly fraud. No type of system can prevent a shopper from making false claims about purchases.
Ways to Prevent All Types of Fraud
From fraud prevention tools to chargeback mitigation alerts, merchants should use whatever they can to fight true and friendly fraud. Businesses should try doing the following to curb true fraud:
- Use resources that can detect stolen credit card information
- Implement the use of AVS or CVV to screen for stolen cards
- Monitor cardholder and shipping addresses, rush orders, and multiple purchases of the same items
- Verify addresses by calling or emailing shoppers
Again, friendly fraud is much harder to fight because they can’t be predicted. However, there are some actions merchants can take.
Create and promote a transparent, complete refund policy, which makes it easy for unsatisfied customers to get refunds. Refunds are much less expensive than chargebacks. Too many chargebacks can cost merchants their merchant accounts, which impacts their abilities to accept credit and debit cards.
Other actions they can take include:
- Employing a fulfillment system
- Having a friendly, informative team of customer service representatives
- Tracking return shipments so that refunds can be issued promptly
- Using clear transaction descriptors, which include business name, website, address, and phone number so consumers recognize purchases when they review their credit card statements
- Refraining from making false or misleading marketing claims
Blockchain technology alone isn’t the answer to fraud and chargebacks. However, it can be another tool that can help merchants against cases of true fraud. Every little bit helps.
Using some of the other tips here, as well as blockchain, can help merchants protect themselves best. As blockchain technology becomes more sophisticated and advances, there is a good chance it could grow into a stronger security tool for ecommerce.
Apply for a Blockchain Merchant Account
If you are a business interested in obtaining a blockchain merchant account, should contact eMerchantBroker.com. EMB works with all types of businesses, including those that accept blockchain technology. Apply online today.