Posted by tina on Sep 19, 2016


Faced with Chargebacks- You are Not Alone

 Whether it’s due to customer dissatisfaction, ‘friendly fraud’ or outright fraud, being faced with a credit card chargeback is an inevitable part of a ecommerce. 

If it has happened to you, take some comfort from the fact that you are far from alone. A a recent study from Juniper Research shows online transaction fraud is part of a worrying – and fast growing – trend.

According to the research, in 2015 online fraud was said to be costing more than $10 billion a year. By 2020, these figures are predicted to rise to a staggering $25.6 billion annually, which, say the study authors, is equivalent to $4 out of every $1,000 online transactions.

The study shows that while banking and airline companies were taking heavy losses, it was e retailers that are predicted to bear the brunt of fraudulent transactions by 2020, with losses predicted to total $16.6 billion a year.

What is Causing the Rise in Online Fraud?

According to the online payment fraud: key virtual strategies & management 2016-2020 report, it’s the steps being taken to prevent off-line fraud that are contributing to this surge. As additional measures are introduced to make cardholder present fraud more difficult, fraudsters are turning their attention to internet retailers.

In addition, as internet shopping is becoming more popular, and an increasing number of people are turning to mobile transactions, this further increases the likelihood – and opportunity – for online fraud.

High risk merchants frequently have higher than average chargeback rates, which is one of the main reasons for a high risk classification. Still, standard and low risk companies also are hard hit by chargebacks, particularly "friendly fraud".

Of course friendly fraud is not so friendly. Instead, savvy consumers know how to game the system in an attempt to get goods or services for free.

These consumers contact their card issuing bank to dispute a transaction.  The consumers know banks often side with their customers and there's a good chance the bank will reverse the transactions in favor of the consumer.  And you lose.  

Reducing Your Risk for Chargebacks & Fraud

Although this increase is an obvious concern for internet retailers, there are measures that you can take to lower the risks. Such as:

  • looking for inconsistencies. For instance, the credit card security code might be incorrect or there might be a different shipping and billing addresses; the billing address might be for the U.S., but the shipping might be for overseas.
  • a customer who only gives a cell phone number. This isn’t too unusual, but if you’re not sure, make an effort to confirm the address or speak to the customer.
  • placing a limit on the number of orders/credit card transactions that a customer can make in a specified period.
  • conducting some follow up checks if somebody is ordering high quantities of expensive items or making multiple purchases on the same day, especially if they are from strange locations, or countries known to have a high risk of fraud.
  • ensuring that your customer service is exemplary and setting out clear terms and conditions on your website. Make sure that your customers know that should there be a problem with a purchase, they can come to you, rather than letting them feel their only option is to go to their credit card company.
  • making sure that all of your item descriptions are as accurate as possible and that images accurately represent the item that you are selling; where you can avoid stock pictures.
  • ensuring that your buyers have a clear way of contacting you if they have a problem. On the shipping note, make what they should do should there be a issue with a purchase.

Fighting A Credit Card Chargeback

If this should happen to you, make sure you have the necessary information that you’re going to need you fight a chargeback. The measures you can take include:

  • ensuring that you keep detailed records of transactions. This includes the date and time of the transaction, the amount of money that was spent, and what authorization information was obtained. This will help should a customer simply forget they brought an item from you.
  • fighting a case you feel you can win. Some cases might not be considered worth fighting, however, If the transaction is worth a lot of money and you feel the chargeback is fraudulent then it might be a good idea to challenge it.
  • providing information concerning a potential chargeback as soon as possible.
  • speaking to your customer and seeing if you can come to a mutual agreement to prevent the chargeback.


Fraudulent transactions and chargebacks are part of business online.  As the research shows, fraudulent transactions will continue to increase for ecommerce merchants. in the coming years.

By taking some basic measures to lower your risks of fraud, and addressing any concerns you might have prior to an order, you can go some way to reducing the chance of it happening to you.

In addition, keeping good records, offering exemplary customer service and making your descriptions and terms and conditions as clear as possible, you can lower your risk of a chargeback.

What are you doing to reduce your chargebacks?  

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