Although EMV and other developments are helping to curb identity theft fraud and unauthorized transactions, chargeback fraud remains a major threat to eCommerce merchants.
Tampa Bay, FL (PRWEB) January 04, 2016
Recent studies predict that card-not-present (CNP) fraud will nearly double from 2014 to 2018—rising from $10 billion to $19 billion (1)—and indicate that remote channel fraud is up to seven times as difficult to prevent as in-person fraud. (2) Consequently, many acquiring banks have started moving Internet retailers to their “unapproved merchants” lists to avoid escalating fraud and chargeback costs. (3) Chargebacks911, a leading dispute mitigation and risk management firm, says these trends underscore the importance of effectively managing chargebacks in order to minimize losses and maintain the ability to process credit cards.
According to the 2015 LexisNexis True Cost of Fraud Study, (2) eCommerce merchants without a physical presence are liable for a greater portion of chargebacks, representing 55% of their fraud costs. The study also showed that fraud loss as a percentage of revenue continues to climb; for large eCommerce merchants, that figure was 2.5 times higher in 2015 than in 2013, jumping from 0.53% to 1.39%. Furthermore, the number of successful fraudulent transactions nearly doubled from 2012 to 2015, increasing from 80 to 156 per month. (2)
A Javelin survey (1) found that fraud- and chargeback-related expenses account for 13% to 20% of merchants’ operational budgets. More than one-third of that fraud/chargeback spend went towards personnel costs; yet over half of digital goods merchants and around two-thirds of hybrid merchants believe that the overhead cost of internal fraud staff is not justified and adversely impacts budget allocations for other departments. This may explain why 54% of digital goods merchants and 65% of hybrid merchants now see outsourcing as a cost-effective solution. (1)
“While technology has benefited retailers in many ways, it has also contributed to growing levels of fraud,” states Monica Eaton-Cardone, co-founder and Chief Operating Officer of Chargebacks911. “Although EMV and other developments are helping to curb identity theft fraud and unauthorized transactions, chargeback fraud remains a major threat to eCommerce merchants.”
Chargeback fraud—also known as “friendly fraud”—is perpetrated by a retailer’s own customers when they file disputes to obtain unjustified refunds for merchandise they ordered and received. Not only does the merchant lose the sale and the merchandise—as well as related shipping and handling costs—they must also pay chargeback fees and may even be dropped by their payment processor if their chargeback levels exceed a specified threshold. Furthermore, Chargebacks911 has found that half of consumers who are issued a chargeback will file another claim within 60 days, (3) thereby multiplying the cost of each chargeback.
“Some merchants may balk at chargeback management costs, but ignoring chargebacks can be far more detrimental to their bottom line and their ability to accept credit cards,” Eaton-Cardone explains. “An experienced risk management partner can help eCommerce merchants to reduce chargebacks, recover more profits and preserve their approved merchant status while avoiding internal staffing and training costs.”
Eaton-Cardone invites merchants to download a free chargeback prevention eBook for valuable tips on combating chargebacks, and she encourages online retailers to sign up for a free chargeback analysis to learn how an effective risk management solution can positively impact earnings.
For further information on Chargebacks911 and its proven chargeback management solutions, visit http://chargebacks911.com.
About Global Risk Technologies and Chargebacks911:
Global Risk Technologies is best 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. It has approximately 350 employees worldwide and currently manages over 200MM transactions worldwide each month.
Chargebacks911 is a division of Global Risk Technologies, and was developed specifically to offer immediate aid to merchants 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 clients to help them keep dispute rates down and retain their ability to accept credit cards. For more information, visit http://www.chargebacks911.com.
1. Javelin. The Impact of Fraud and Chargeback Management on Operations; September 2015. info.trustvesta.com/research.
2. LexisNexis. 2015 LexisNexis True Cost of Fraud Study; September 2015. lexisnexis.com/risk/insights/true-cost-fraud.aspx.
3. Cafiero Giusti, Autumn. “As Chargebacks Rise for Merchants, ISOs Respond”; Payments Source; December 3, 2015. paymentssource.com/news/retail-acquiring/as-chargebacks-rise-for-merchants-isos-respond-3022930-1.html.