MERCHANTS VS. “FRIENDLY” FRAUD

Dec 14, 2015

“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 friendly fraud 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 friendly fraud 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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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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