I have highlighted how sly scammers are taking advantage of the chargeback process and your online stores’ refund system in previous posts…
So by now I’m guessing that you must be thinking back to every chargeback and refund you have ever received and wondering where you may have been totally tricked.
The scary thought is, the big, bad Boogeyman that we spoke about in our last article is growing bigger and stronger every 2 years.
So is the Boogeyman coming after you?
If you’re an eCommerce merchant, selling any goods or services online, then the answer to this question is simply — Yes.
Transacting online is already more risky than having a bricks and mortar store, because you open yourself up to a whole realm of cyber security and fraud risks. This is just a part of doing business in the online ecosystem of today.
Well..Why is transacting online so risky?
Traditional shoplifting requires a much higher level of motivation and commitment, and that ratbag kid who is always seen stealing chocolate bars from the local convenience store, is much easier to catch.
Friendly Fraud is Faceless
Friendly Fraud on the other hand is completely faceless, and doesn’t require much effort from a fraudster at all. In fact it’s so easy, that everyday online shoppers with their own credit cards are the true culprits, feeding on your revenue.
Let’s take a step back and remember Jane from our last article on Refund Fraud, who purchased a laptop and tablet online? Well let’s take another look at Jane’s story.
Say Jane contacted the merchant requesting a refund, but the merchant declined her request. What does Jane decide to do in this scenario?
Answer:
Jane decides to file for a chargeback with her issuing bank, this time saying that she never approved this transaction and claiming it was actually a fraudulent charge to her credit card. Sounds easy enough.
Well it is… For Jane anyway. The bank automatically refunds Jane her money, and Jane is able to just sit back and let the bank settle the chargeback request, whilst the merchant is left wondering why their account is in a deficit and their monthly cash flow is down.
Although the merchant has already denied Jane’s request for a refund, the merchant now must make a decision — whether to dispute the chargeback or simply let it fall under the “cost of doing business”, knowing that it is very unlikely they will win in a chargeback dispute.
Why do the Banks & Card Associations make it so easy for Fraudsters?
Well think of it as one big turning wheel:
(1) Online merchants are dictated by the banks holding their accounts..
(2) Banks and financial institutions are required to adhere to card associations’ (like Visa and Mastercard) participation guidelines, because they want to be able to issue their cards to customers…
(3) Card associations primarily are just concerned with the majority of the population using their services, so they hold a “Customer First Policy”…Following?
So what this means for merchants is that major card associations like Visa and Mastercard are the big guys, and unfortunately these guys prioritise consumer rights over merchant rights.
The Good News Is
You actually have a chance to beat these not so Friendly Fraudsters at their own game.
It’s actually really easy. Start by putting a preventative system in place that integrates with your eCommerce shop front. This way you have a much better chance of seeing them coming, and a better chance of protecting revenue.
How a fraud tool like Disputify works:
- Disputify easily connects to your shopfront and payment gateway
- Drawing on millions of data points, this fraud tool is like no other, and can track and flag likely offenders
- The power then falls in your hands — You can block any transactions that are flagged as risky and stop potential scammers right in their tracks!
