Having the option to pay even more ways for digital goods, like music streaming and news subscriptions, has created new obstacles for merchants.
Customers love the convenience and 24-hour access to services, but merchants are having to deal with an uptick in friendly fraud, as well as the newer challenge of family fraud.
Friendly Fraud vs. Family Fraud
Friendly fraud is when a shopper makes a purchase, receives the item or service, and then, initiates a chargeback to avoid paying for it. Family fraud is similar, and it becoming more common as family phone and tablet use grow. With family fraud, a child or teenager makes a purchase, such as an online game, without a parent’s permission. Once the parent learns of the purchase, the person initiates a chargeback because the child was not authorized to buy it. Both of these types of fraud are difficult for merchants to stymie because they are not due to stolen credit cards or identity theft.
Too Many Ways to Pay Makes It Harder for Merchants
Now that customers can buy things using multiple digital wallets, it can be more difficult for them to keep track of what they buy. Failing to remember a purchase or forgetting one a parent permitted a child to buy something leads to more confusion, which leads to more chargebacks.
How Digital Goods Fraud Differs From Other Types
It is much more difficult to discover the identity of a digital goods fraudster than a card-not-present cyber attacker. This type of purchasing also is much faster make it much more tempting for them to continue to make these types of purchases.
Merchants find it difficult to find and assemble the appropriate documentation to respond with a successful explanation of a disputed transaction due to the specifics surrounding a digital goods chargeback, as well as the many payment methods available. At this point, the best approach to fighting digital goods chargebacks is by identifying fraudsters through emails and IP addresses. This information can be used to link a disputed transaction to a card account.
Ways to Fight Back
Reducing fraud is essential to maintaining a good business and reputation. Merchants and acquirers should do the following to limit chargebacks:
- Create a number of checkout stages online to limit the risk of real errors
- Develop multi-layered fraud screening filters safeguard digital payments from end-to-end without stopping genuine sales
- Request account registration
- Standardize and uphold customer service policies
Getting chargeback insurance is another way to protect businesses from chargebacks and losses. It protects a business if a transaction was made via an unauthorized credit card. Reach out to chargeback insurance providers to find all options available.
Another option that is proven effective is a chargeback mitigation alert system, which can significantly reduce chargebacks.
A Merchant Account Provider with a Top-Notch Chargeback Alert System
eMerchantBroker.com (EMB) offers a chargeback mitigation alert system, Chargeback Shield, that can help you reduce chargebacks by 25%. By partnering with Verifi, its Cardholder Dispute Resolution Network (CDRN), and Ethoca’s alert system, EMB has been able to offer an alert system that allows businesses to resolve credit card transaction disputes directly.
If you are looking for a processor that will help you trim down your chargeback ratios, then consider EMB. It specializes in working with high-risk merchants, and it makes the merchant account process simple and fast. Apply online today.
*Chargeback Shield is not an insurance service. EMB does not sell insurance and Chargeback Shield is not insurance; it is an alert system.