We have recently noticed an uptick in chargebacks initiated against our merchants. We understand how disheartening this is. Perhaps you have already delivered service or delivered an expensive product such as a piece of jewelry to a thief. We call fraudsters thieves because that’s what they are. They intentionally rob merchants of goods and services with intention and deceit.
We’ll break down the Top 3 reasons that chargebacks are initiated:
#1 – True Fraud
True fraud is perpetrated when merchants accept a stolen credit card or the data from a stolen card. It also happens through the use of counterfeit cards that might look and feel like a real credit card, but the data actually belongs to a real credit card owned by someone else. Other fraud occurs when people intentionally obtain products or services with no intention of ever paying for it. Common claims include merchandise was never delivered, service was not as expected, or the charge is simply not recognized.
Defense Play: Your best defense against fraud is to make sure you have policies and procedures in place to verify the ID of your customers, use the Address Verification System by entering the street address and zip code of the card and checking for mismatches. Pay attention to body language and attempts to distract you while completing the transaction. If you are in doubt, call the Merchant Hotline and tell the operator that you have a Code 10 Transaction. That will cause a phone call to the cardholder from their bank to see if they are really participating in a transaction at that time. These are the most difficult cases to win. Let’s face it, if someone stole your credit card information, you wouldn’t want to pay for purchases that you didn’t participate in.
#2 – Friendly Fraud
This type of fraud has increased exponentially during the recent pandemic. In the case of friendly fraud, it is usually a family member who is committing the fraud. A teen may borrow mom’s card to make an online purchase and then use the card again to buy something else from somewhere else. When mom gets the bill, the charge will be disputed. The same type of friendly fraud can be committed by an employee with access to a credit card. Friendly fraud can usually be proved to be fraudulent, and the cardholder will likely remain liable for the charge.
Defense Play: Once again, great documentation can really help you prevail. The threat of legal prosecution again the parent and/or child works wonders in prevailing. If you shipped a product to an address and can prove that the address belongs to the cardholder and a tracking record from UPS indicates the product was delivered to that same address, you are almost guaranteed a win.
#3 – Merchant Errors
Sometimes a cardholder will dispute a charge that they don’t recognize on their statement. As an example, a Kirby vacuum dealer might be known as, The Kirby Company but have their Merchant Account set up as Bill Smith Enterprises dba The Kirby Company. A customer may dispute that simply because the merchant description is incorrect. Other merchant errors could include shipping the wrong merchandise or sending the wrong quantity of product. Sometimes people make purchases of a product that is on sale but are inadvertently charged the regular price and they dispute the entire charge. These types of disputes are almost always won by the merchant with a little bit of written explanation.
Defense Play: We will say it again, great documentation is the key to prevailing in this type of chargeback dispute. Information provided to the cardholder’s issuing bank can go a long way toward resolving these types of issues.
Need Assistance with a Chargeback?
If you receive a chargeback and need assistance fighting to get your money back, we can help you!
If you are not an existing Merchant, don’t let that stop you from calling us for help. Our team is ready to go to battle with you. Call us at 833-AURORA (833-287-6722) or email us at firstname.lastname@example.org.