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Chargeback Insurance and Other Tools Help Curb Fraud

How to Prevent Online Fraud from Hitting Your Business

In 2017, the number of consumer complaints about fraud, identity theft, and other concerns dropped to 2.68 million, according to the Federal Trade Commission’s 2017 Sentinel Network Data Book. There were 2.98 million in 2016. Despite the decrease in overall complaints, consumers still reported a total loss of $905 million to fraud that year.

Additionally, 14% of all consumer complaints were due to identity theft with credit card fraud being named as its most common type, according to the FTC’s data book.

Cyber attackers are getting more sophisticated and credit card fraud is not going away, so merchants need to do find solutions, such as getting chargeback insurance coverage or other steps to cut down on fraud. Cash flows weaken and impact the overall health of a business if fraud is not kept in check. Find out what you can do to protect your business.

Get to the Know the Process and the Fallout

After a credit card issuer receives notification of a disputed or fraudulent transaction, the provider initiates the transaction dispute process. The cardholder provides all of the important information about the card, including when it was used last. The issuer also goes over recent charges with the cardholder to determine whether there were any additional fraudulent transactions. After this is completed, the issuer determines if the merchant is at fault and what responsibility it needs to take.

In most situations, the merchant is found at fault and has to issue the cardholder a reimbursement. The merchant ends up taking a loss on whatever product or service was involved in the transaction, as well as any chargeback fees levied against it. This is not only expensive, but racking up too many chargebacks can cost merchants their merchant accounts.

Failing to take the appropriate action to prevent and fight chargebacks could have a lasting impact on your business reputation and revenues. It also could have you paying higher fees and rates to process cards. Most importantly, merchants that have accounts terminated due to excessive chargebacks have a much harder time getting a second merchant account from another provider in the future.

Reducing Fraud Online

Ecommerce providers, high-risk merchants, and others are especially susceptible to fraud, so they need to take whatever action possible to prevent them. Here are some steps that can be taken:

  • Request All Card Information: Have consumers submit full names, addresses, and their cards’ expiration dates and security codes to ensure they are valid.
  • Have a Valid Return and Refund Policy and Make Sure Customers Can See It: It is good business to include your refund and return policy in the same email that confirms a purchase or offers updates about shipping. This way customers know how to proceed if they are unsatisfied or need to make a return. By making this information accessible, you are cutting down on the chances of the shopper bypassing you and initiating a chargeback with his/her credit card company.
  • Know What Fraud Looks Like: Merchants should keep their eyes peeled for shipping and billing addresses that don’t match, especially in situations where the states are different. These are signs that the purchase may be being made with stolen credit card information.
  • Keep Accurate Records of Customers Shopping Behaviors: Maintain good records of your customers’ credit card transactions, including purchase dates, amounts, and authorization data. You will be able to compare this information against future transactions. For example, if a consumer goes from making a $50 purchase every other month to charging several hundred dollars a few times a week, this is something that should be on your radar. Organizing and reviewing your customers’ buying habits is a great way to stay ahead of potential fraud.

In Conclusion

Reducing fraud keeps cash flows strong and allows you to remain focused on providing the best possible products and services to your customers. With the right solutions in place, you can feel protected and comfortable accepting credit and debit card payments.

Getting chargeback insurance is one way to protect your business. Another option is a proven chargeback mitigation program. (EMB), a merchant service provider, takes chargebacks seriously. It offers a chargeback mitigation program, Chargeback Shield, that can prevent one in four chargebacks. By partnering with Verifi, its Cardholder Dispute Resolution Network (CDRN), and Ethoca’s alert system, EMB has been able to offer a mitigation system that allows businesses to resolve credit card transaction disputes directly.

If you are looking for a processor that will help you curb chargebacks, then consider EMB. It specializes in working with high-risk merchants, and it makes the merchant account process simple. Applying online is simple and quick.


*Chargeback Shield is not an insurance service. EMB does not sell insurance and Chargeback Shield is not insurance; it is an alert system.