Chargeback fraud puts a lot of businesses in a difficult position. Banks have adopted chargeback rules that many consumers have learned they can abuse.
Tampa Bay, FL (PRWEB) March 25, 2015
Earlier this month, PlayStation users found that their PlayStation Network accounts had been hacked, and that "the hackers had made hundreds of dollars’ worth of fraudulent purchases". (1) Unfortunately for the victims, they were given just two choices by Sony: "pay hundreds of dollars to cover the fraudulent charges, or dispute the charges with their banks and have their PlayStation accounts banned forever", which would also result in the loss of all PlayStation game licenses they had already purchased. According to Chargebacks911, the fraud reported would have been, under normal circumstances, the type which a customer could dispute by filing a chargeback with his or her bank; however, Sony’s stringent policy essentially prohibits users from taking this course of action without repercussions, which Chargebacks911 says is a direct result of friendly fraud.
Chargebacks were created as a means of consumer protection and are meant to be used to remove unauthorized transactions that appear on a cardholder’s statement. But as some dishonest consumers quickly recognized chargebacks to be a method of obtaining undeserved refunds for legitimate purchases, a new term has arisen: “friendly fraud”. Friendly fraud results when a customer contacts the bank for a chargeback rather than securing a refund directly from the merchant; according to data collected by Trustev, 25% of respondents from a survey of 1,000 U.S. consumers see no problem with people committing friendly fraud, costing merchants a reported $11.8 billion annually. (2) Friendly fraud has become synonymous with cyber shoplifting, an alarmingly popular action that severely damages a business’s longevity. Chargebacks911 maintains that as many as 85% of all chargebacks are filed fraudulently.
As merchants have become alerted to this new trend, some have instituted policies designed to dissuade this dishonest consumer behavior. For instance, Sony’s policy states that any member of the PlayStation Network who chooses to file a chargeback will be banned from the network. The chargeback-wielding account holder will also forfeit ownership of any previously-purchased game licenses.
After hearing of Sony’s policy, Monica Eaton-Cardone, Chargeback911’s COO, stated, “Chargeback fraud puts a lot of businesses in a difficult position. Banks have adopted chargeback rules that many consumers have learned they can abuse. While I am surprised that some merchants enforce such strict policies, I understand why they put these measures in place—they often feel they have no other choice.”
Chargebacks911 goes on to report that there are very few options available for merchants victimized by friendly fraud. While many merchants offset chargeback fraud by passing the consequences on to the consumer, Sony’s unique approach unintentionally robs innocent consumers of their right to protection.
While Sony’s chargeback policy does help raise awareness of the very difficult situation merchants face on a daily basis, the true solution, per Eaton-Cardone, is educating the public and adopting industry-wide standards that encourage consumers to use chargebacks as a last resort, rather than a no-hassle solution, thereby effecting positive industry change.
Eaton-Cardone maintains that U.S. merchants, credit card issuers and consumers all have a responsibility to work together to prevent friendly fraud, since the trickle-down costs affect all of them in terms of reduced profits and increased prices. Chargebacks911 helps eCommerce merchants prevent and dispute cases of friendly fraud. The company is known for its effective methods of establishing long-term benefits for everyone in the credit card industry.
To learn more about Chargebacks911 and its dispute mitigation and risk management services, visit http://www.chargebacks911.com.
About Global Risk Technologies and Chargebacks911:
Global Risk Technologies is most known for its role in payment processing solutions that cater to each side of the value chain: Chargebacks911.com and eConsumerservices.com. The firm is headquartered in Tampa Bay, Florida, with offices in Ireland and Atlanta. They have approximately 350 employees worldwide and currently manage over 150MM in transactions each month, with clients located in the U.S. and Europe.
Chargebacks911 is a division of Global Risk Technologies, and 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 focuses on chargeback mitigation and risk management. It specializes in servicing Internet merchants and acquiring banks, offering dispute response solutions and deep analytics. Chargebacks911 works with its client base to help keep dispute rates down and retain the ability to accept credit cards. For more information, visit http://www.chargebacks911.com.
1. Abel, Jennifer. “PlayStation Network Accounts Hacked; Sony Leaves Victims Holding the Bag.” N.p., 13 Mar. 2015. Web. 24 Mar. 2015. consumeraffairs.com/news/playstation-network-accounts-hacked-sony-leaves-victims-holding-the-bag-031315.html.
2. Costa, Diogo. “Take Care: “Friendly Fraud” Is Widespread.” N.p., 22 Jan. 2015. Web. 24 Mar. 2015. tech.co/take-care-friendly-fraud-widespread-2015-01.