Some retailers assume that chargeback fraud is a “necessary evil” or a “cost of doing business” if you want to be able to accept credit card payments. However, it certainly doesn’t have to be with the right approach. To do what it takes to reduce chargeback fraud, there are a number of important things to keep in mind.
Reducing Chargeback Fraud, One Step at a Time
By far, the most important step that retailers can take to reduce chargeback fraud involves following the very strict payment processing protocols of the card networks that they’re using. This is especially helpful in terms of “card not present” transactions. These protocols are in place to allow retailers to capture a customer’s IP address, the CVV verification and more – all of which can be helpful if there is a problem later on.
Another method involves leveraging blacklists to your advantage. Blacklists are largely what they sound like – lists of people who repeatedly use chargebacks after purchases. They tend to have larger counts of fraud in their history and if you cross-reference a customer against the black list and come up with a hit, you can simply deny the purchase outright.
It’s equally important to always communicate regularly with customers in the event that there is a large issue going on with a purchase. While this won’t do anything to stop deliberate fraud, it could prevent a situation where a customer institutes a chargeback simply because they were unhappy with the product they purchased or the services that were rendered. It’s an opportunity to clear up a small issue now before it has a chance to become a much bigger one down the road.
Equally important is taking a proactive approach to reviewing all billing descriptors and transactions. You should always review these documents on a regular basis to help make sure that there are no red flags in terms of fraud, that no purchases have turned into disputes and more. Don’t wait for the chargeback to happen to fight it – try to prevent the chargeback from happening in the first place.
Finally, it’s always critical to make it a priority to work with the right payment processor in the first place. Instead of going with the cheapest processor that you can find, look for an organization that has their own fraud professionals on staff. They’ll be able to address these types of situations as they arise, freeing up the valuable time of business leaders so that they can focus on other aspects of the organization where their time and attention can make the best impact.
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