MERCHANTS VS. “FRIENDLY” FRAUD

“Rather fail with honor than succeed by fraud.” – Sophocles

Fraud can never be “friendly.” Credit card fraud is harmful to any business. To prevent profit losses, merchants shouldn’t neglect this threat. They should figure out unlawfully filed chargebacks, and minimize the risks and expenses associated with them.

Consumer Confidence And Ecommerce Growth

As compared to the US, eCommerce in Europe is growing faster – at about 20% per year. The revenues are expected to count for $202 billion in 2015. However, without consumer confidence, there won’t be any growth in eCommerce. Customers need to be confident they are making safe and secure purchases. On the other hand, merchants look for long-term success and sustainable revenue growth.

In fact, consumers’ actions can cost merchants $11.8 billion per year, taking into account “friendly-fraud” losses, as compared to $2.7 billion caused by identity theft. This is according to Visa.

Given 2014 data, each dollar of fraud counted for $3.08 for the merchant. The amount is on the rise. This is certainly an alarming issue for businesses all over the world.

Merchants that accept checks and/or plastic payment cards should invest in chargeback insurance. Importantly, they should look for the best and the right chargeback insurance providers like EMB. This is especially vital for high-risk merchants who deal with fraudulent charges more often. Though your chargeback fees cannot be eliminated by the insurance, they can be reduced. Choose EMB, a legitimate chargeback insurance provider to protect your business.

“Friendly” Fraud

Fraud is considered “friendly” if it isn’t caused by an identifiable criminal gang or an intentional behavior. In fact, when a family member makes an online purchase, and then the cardholder cancels the payment, that’s regarded as “friendly” fraud.

In the same way, the customer’s bank statement details may not correspond to the retailer’s brand name. With the product having already been delivered, the customer may request a chargeback without contacting the merchant to identify the purchase.

Given another “friendly-fraud” case, the customer may claim a refund after finding out he/she lost the opportunity to return the unwanted product.

These are all unintentional “friendly-fraud” cases. However, the number of customers who deceive merchants is rising. As a rule, such customers get a product then intentionally request a refund through the bank, claiming the purchase wasn’t delivered.

Merchants are concerned about this issue, as 86% of cardholders don’t let them know about the case, filing disputes directly with their banks. According to Visa, 40% of consumers filing a fraudulent chargeback tend to file it again within some 2 months.

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