Chargeback Expertz

Chargeback Expertz is a Detailed Risk Management Company helping Retail and Online Merchants. website

Best Steps to Fighting Chargeback Froud.

While chargebacks came about to help customers feel comfortable with using their card knowing that their money was secure, we have seen in recent years a plethora of chargebacks to other businesses, some legitimate, others could have very well been prevented.


There are many reasons why a consumer may initiate a chargeback.

Processing errors.

Fraud. Some customers try to get away requesting a chargeback after they have already received their goods and/or services.

Customer disputes.

Merchant overcharged the customer.

Product never arrived.

Credit or debit card was used without permission of the cardholder.

So, why should a business fight chargebacks? Mainly because the ramifications of these chargebacks will hurt your business profits quite substantially. Too many chargebacks can hinder one’s business and you will begin to see quite a loss in profits pretty fast. Chances are when you receive a chargeback, not only will you be out the profits, you will more than likely not receive your product back from the customer so in reality, you are losing double the money. You will also be charged a chargeback fee from your bank which can range anywhere from $20-75.

Chargebacks are one of the biggest reasons why eCommerce business get into trouble with their payment processing provider. These providers only allow a certain number of chargebacks before they will eventually suspend, or close your merchant account and some even charge a considerable fee. Usually the amount allowed is 1-2% though this varies with each processing center. For this reason it is very important that you take care of any potential chargebacks in the very beginning of the process and learn to manage your business to reduce the amount of chargebacks initiated in the first place.

Understand your risk. Merchants who do business online are at particular risk of chargeback fraud because they are not able to see the credit card being used or check a customer's identification or signature, says Monarch. As a result, it can be easier for fraudsters to use stolen credentials to order merchandise online. In addition, because the merchandise is often shipped without a signature required for delivery, it can be easier for friendly fraud perpetrators to claim the product was never received.

Look for unusual activity. From there, Van Riper recommends monitoring transactions for unusual activity, such as orders for high volumes of product or for many expensive items of the same type or brand. Review the location of the transaction. If the billing address is in New York and the customer is shipping to a place in Oregon, you may wish to further verify the transaction by contacting the customer.

Examine notification codes. When you receive a chargeback, it will have a reason code. Each code, which varies by card network, will indicate the reason for the chargeback, such as "counterfeit magnetic stripe" or "fraud, card not present environment." Once you have the code, investigate the transaction to spot irregularities, says Russo. Were there missed indicators that this was a fraudulent transaction?

Review nonfraud chargebacks and declines. Don't just scan your reason codes for fraud. Investigate other reason codes and your decline rates, Russo says.

Make your case. If a chargeback has been filed, the bank will ask for all records you have verifying that the order is real. Be sure to provide those in a timely manner, Monarch says. They may include terminal records, signatures and any other information available for in-person transactions. Online transaction backup may include address verification and CVV verification, IP address information that coordinates with the purchaser's address, and product delivery records with delivery confirmation showing the customer received the package.

Work with your processor. Russo, who has previously been employed by two processing companies, says these firms may have additional resources to help you combat fraud, such as suggestions for enhancing security and advice on how to better verify transactions. Stay in touch with your processing company to ensure that you're adopting the latest and best practices to prevent fraudulent transactions, he says.

While some chargebacks may be your fault, others can be preventable and then there are others that you can fight that have no merit. Let us help you fight against chargebacks. It could potentially save your business…and your pocketbook.