The best way to fight friendly fraud chargebacks is to limit and prevent their occurrence by being proactive—you have to stay one step ahead and be prepared.
Tampa Bay, FL (PRWEB) September 29, 2013
Friendly fraud, occurring when customers make a purchase, receive the item or service, then dispute the charge and get an unwarranted refund, is an ever-growing obstacle many online merchants continually battle. Because many consumers operate largely on a mindset of convenience and ease, online shopping has become the new norm - but dispute mitigation company, Chargebacks911, says the the influx of customers comes with a steep price for merchants who are constantly fielding friendly fraud attempts. Visa estimates that the total cost of friendly fraud reached $11.8 billion last year.(1) In a recent interview with STORES, the publishing group of the National Retail Federation, CEO and owner of Chargebacks911, Monica Eaton-Cardone, maintains that friendly fraud chargebacks can be limited – but only with the help of merchant initiative can they be prevented.
Friendly fraud, which can only result from a card-not-present, or online transaction, is increasing as the world is changing to become internet-based. As e-commerce takes over the marketplace and expands, chargebacks have become a nuisance to online merchants. Over the last several years, Eaton-Cardone says that incidents of friendly fraud have become rampant—and the reasons often vary:
- Consumers live and work in a fast paced environment. Unfortunately for many, a chargeback has become a quick fix remedy that has the illusion of having no real consequence.
- Forgetting to contact the merchant within their return policy timeframe in order to get a refund has proven to be a leading source of friendly fraud chargebacks. Consumers will claim they never authorized the charge associated as a last ditch effort to get a refund.
- Consumers who want something for nothing in return will often pretend that an identity thief used their credit or debit card and contact their bank to dispute the charges.
For most merchants, the process of fighting a friendly fraud chargeback is not only lengthy, but also costly—especially if the case is taken to arbitration. Eaton-Cardone warns merchants against dismissing the threat of friendly fraud as trivial, as the repercussions can be serious:
- Preparing the case documents required to fight these types of chargebacks takes valuable time and money and often requires a higher level of expertise.
- Having chargeback cases reviewed can result in a separate and additional fee imposed by the processor.
- A potential arbitration fee between $250 and $500 may be charged in the event the case progresses beyond the first appeal.
- Too many chargebacks can result in increased fees, fines and processing costs or rates, leading to increased prices to the consumer and less profits for the merchant.
The entire process can last up to six months, often at an expense which far exceeds the cost of the originally purchased item. However, per Eaton-Cardone, by implementing tactics that detect and deter friendly fraud, merchants can likely decrease the number of consumers initiating chargebacks.
“The best way to fight friendly fraud chargebacks is to limit and prevent their occurrence by being proactive—you have to stay one step ahead and be prepared,” said Eaton-Cardone. “Merchants have to realize that the viability of their businesses is at risk and the responsibility of limiting that risk lies upon them.”
Because most merchants are unprepared to proactively handle the issue of chargebacks, the loss of revenues and time associated with handling the issue can cause much frustration. As a result, many merchants take a stance of coping with chargebacks and responding to incoming cases when they can. Chargebacks911 was founded by Eaton-Cardone, a former online retailer, to relieve merchants of the burden of handling chargebacks. After her own trial and error in experiences with chargeback issues, she formed Chargebacks911 to provide fast and reliable services that not only help recoup the loss of funds as a result of increasing chargebacks, but to also curb future chargebacks so that merchants retain all processing abilities.
Chargebacks 911 responds to chargeback cases with a three-step sequence:
1. Receive and identify the chargeback customer on the company’s behalf, which automatically stops any future sale from recurring by stopping any subscription related to the customer;
2. Classify the chargeback using Chargebacks911’s proprietary coding system to determine a risk reward prediction (whether or not it is likely the merchant will win the case);
3. Prepare an intelligent response that best serves the case requirements— to not only help the merchant win the case, but improve the reputation of the merchant in the eyes of the credit card company, and further deter the consumer from a repeat scenario.
“Handling chargebacks can be very overwhelming for merchants—by incorporating a third-party source, you can take the guesswork out of the situation,” said Eaton-Cardone. “The result is that the online retailer is then free to do what they do best: providing great service to their customers.”
Chargebacks911 specializes in servicing merchants and the majority of banking institutions. For more information about Chargebacks911 and its services, visit http://www.chargebacks911.com.
Co-founder Monica Eaton-Cardone established Chargebacks911 in September, 2012, out of necessity after many years as a merchant struggling to find a solution to chargeback issues. Chargebacks911 was developed specifically for merchants to offer immediate aid through proprietary technology and provide the necessary function that gives merchants the freedom to focus on their core competency and optimize their in-house skill set. Chargebacks911 specializes in servicing Internet merchants, and offers both response and resolution services for chargebacks and cardholder disputes. The company works with merchant clients to help them keep their dispute rates down and retain their ability to accept credit cards. Chargebacks911 provides a unique exception to standard dispute processing for dissatisfied consumers who wish to remedy transactional disputes, without the requirement of additional intermediaries or lengthy correspondence requirements. For more information, visit http://www.chargebacks911.com.
1. Johnston, Peter. "Dealing with ‘Friendly Fraud’." Stores.org. N.p., Sept. 2013. Web. 27 Sept. 2013. stores.org/STORES%20Magazine%20September%202013/dealing-%E2%80%98friendly-fraud%E2%80%99.