Merchants Must Protect Themselves with Chargeback Insurance

“Friendly fraud” has plagued retailers and credit card providers for the last few years. But it seems that only the most extreme cases receive any attention from the general public and even small merchants. For example, the recent hacks of Target and Neiman Marcus made headlines for months in the United States and bank officials, credit card distributors, and even the government vowed to put an end to consumer fraud. In fact, the United States is currently undergoing a major shift in credit card technology, as merchants and card providers prepare for the shift from data strips to EMV chips.

But who is monitoring the small instances of fraud conducted mostly by consumers themselves that occur every day, slowly chipping away at the profits of small merchants? In the interest of merchant security, here are the U.S. cities with the highest rates of chargebacks.

Show Low, Arizona has the highest rate of chargebacks (2.2%), followed by Port Washington, N.Y (1.75),  San Jose, Calif., Miami, FL, and Astoria, N.Y. (all 3 at 1.4%), and Miami. High chargeback rates were also found in notable cities like Chicago (1.4%), Los Angeles (1.3%), North Hollywood (1.3%), and Houston (1.3%).

According to a 2013 chargeback study, chargebacks occur for the following reasons: identity theft, failure to receive a good or service as specified, and pricing errors. But they can also occur because of “friendly fraud.” Friendly fraud happens when a consumer makes a purchase, receives the goods then files a chargeback in hopes of obtaining an unwarranted refund. Unjustified chargebacks can be devastating to online merchants, as often times they are not even aware that the chargeback has happened until it is too late. Plus chargebacks also come with additional fees that merchants must pay.

Online merchants must protect themselves against chargebacks with comprehensive, fair chargeback insurance. Find out more about eMerchantBroker Chargeback Suite today.

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