E-commerce fraud has exploded over the last decade. Innovations in card technologies has given consumers a defense against card present crimes at POS. However, card-not-present protections have been adopted slowly by online companies. Most of these companies don’t have dedicated fraud teams or individuals. As a result, companies must ensure that all associates, especially managers, be able to identify and deal with fraudulent behavior.
One growing type of fraud is chargebacks. This occurs when a customer claims a purchase was made without their knowledge, have received the wrong product, or didn’t receive a particular product. Although these claims are possible, in many cases this is a method that fraudsters use to get their money back for items still in their possession. Oftentimes merchants are not notified when a chargeback occurs. So scammers get their money back and merchants lose a sale and are penalized for the chargeback. This can be crippling to a small business.
As point-of-sale fraud becomes more difficult, CNP fraud is predicted to rise. This is based on patterns observed in Canada’s EMV migration between 2008 and 2013. During this time period, counterfeit and lost/stolen fraud dropped by 54 percent, but CNP fraud jumped 133 percent. E-commerce experts estimate that every dollar in fraudulent transactions could cost a merchant approximately $3.08. If a chargeback occurs, good credit card processors will not release a refund until the merchant can investigate. Luckily there are some actions merchants can take to successfully dispute fraud.
When defending against chargebacks, merchants must have a good analytics program to capture time, locations, the IP address, and other information on the website. To combat accusations of sending out the wrong merchandise, take photos or videos of high ticket items that clearly show the shipping address. Also use written procedures that include how items are packaged, insurance information, and a timeframe for delivery confirmation.
The eMerchantBroker Chargeback Suite
As CNP grows, merchants must invest in merchant chargeback insurance. eMerchantBroker offers Chargeback Shield to monitor suspicious activity, notify businesses when chargebacks occur, and give them the tools to track suspicious activity and fight chargebacks. EMB chargeback suite reduces the amount of chargebacks by 15-30% per year.