How do businesses fight against chargebacks?

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The development of technology has completely changed the way we live, study, work, shop, entertain and even how we communicate. With its development, this constantly evolving technology created various security challenges, but it has also given us opportunities to overcome them.

One of the industries that experienced the biggest impact from the development of technology is commerce. It allowed them to transfer their business online and to stay competitive in the new world while at the same time giving them an opportunity to reach more customers around the world. But at the same time, it introduced them to new dangers such as chargeback fraud. If they want to remain successful and keep growing their company, they need to start taking proactive steps in order to protect their business. SEON's security against chargeback scams provides an insight into steps you can take to stop your business from becoming a victim of chargeback.

What exactly is a chargeback?

A chargeback is not a new process, but is affecting more and more businesses throughout different industries. It happens when a customer requests reversal of payment with their card provider by disputing a certain transaction. Card provider follows it up with a merchant by reversing a payment and giving a merchant a certain period to decide whether they will accept it or will they fight against it. Most often, the chargeback is a result of a fraud and merchants will have no chance of disputing it. The damage this can do to the merchant is a lot more than just the loss of revenue from the sale. Merchant will also lose the product, will have to pay the chargeback fee, and in case they decide to fight the chargeback they will have to go through a long and expensive process that still might end up in chargeback.

Sadly, nobody is safe anymore regardless of which industry you are working in. From ecommerce to the restaurant business, fraudsters will find a way to exploit your business. Los Angeles Times has reported that L.A. restaurants are seriously struggling with a new form of dine-and-dash where customers request refunds or even submit a chargeback, claiming they never received part or all of an order. This type of fraud has grown exponentially since the start of the Covid 19 pandemic with fraudsters exploiting the businesses that are putting their trust into their customers desperately trying to stay open in this crazy new world. It is time to put the end to it and start doing something.

What can you do to fight against the chargebacks?

The instances of fraudulent chargeback claims have more than doubled between January and June 2020, and the number just keeps on growing. By taking the following steps you will be able to mitigate the risk of chargebacks happening to your business.

According to the British retail consortium guide on how to avoid these scams, the most important step in the fight against the chargebacks should be investigating means of prevention. By identifying the reason why the chargebacks are happening in your business, you will be able to prevent a large number of them from happening. 

For example, some of the chargeback requests will happen due to the customer not being satisfied with the service or because the product has not met their expectations. By describing your products accurately and with as much detail and by including pictures from different angles, you are giving your customers better insight into your product and reducing the chances of them being unhappy with the product. Keep them informed about their deliveries by providing a tracking code and respond to their queries quickly and within a stated time frame. Most importantly, you need to react on time if you are not able to meet the expected delivery times by contacting the customer and agreeing on a solution. Remember, it is a lot easier to give the customer a refund than deal with a chargeback. These suggestions might seem like simple and insignificant solutions, but together they can make a big difference as they remove the customer's reasoning behind the chargeback request.

While following previous suggestions will considerably reduce the chances, they are not enough to fight against all the types of chargebacks. In order to maximize your protection, you will need to utilize security protocols such as firewall, antivirus or antimalware programs to prevent malicious software from accessing your and customers malicious data, and data enrichment or device fingerprinting to gather more info about your customers and stop fraudsters before they can do any damage. 

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