Friendly fraud is becoming more rampant each year, but e-commerce merchants are fighting back.
To most merchants, friendly fraud and chargebacks used to be considered as a measly ‘cost of doing business’ that merchants begrudgingly absorbed. For many reasons, this school of thought is no longer acceptable and even dangerous for two reasons:
- Visa’s new chargeback and fraud monitoring thresholds changing from 2 to 1 percent.
- Instances of friendly fraud continue to increase.
Fighting friendly fraud can be a losing battle. But with a little creativity — tactics so ordinary, they go overlooked — e-commerce merchants can effectively defend themselves and recover lost revenue.
It was one of the themes last Tuesday at the seminar entitled ‘How is EMV Affecting CNP Business,’ at the Transact 16 tradeshow and conference at Mandalay Bay.
Examples of Compelling Evidence
Compelling evidence, in payments-speak, is whatever a merchant can use to prove a chargeback was indeed a case of friendly fraud. It is a tactic e-commerce merchants are embracing while fighting friendly fraud.
“There is an endless list of things that merchants can come up with such as chat logs or phone logs,” said Rick Lynch, a senior vice president at Verifi and one of the panelists.
Social Media
The search for photos and text evidence on social media channels can be very effective.
Mr. Lynch tells a story of how a Verifi client, an events ticketing merchant, used Facebook to prove a case of friendly fraud. A concert goer, who later filed a fraudulent chargeback, posted photos of himself at the concert on his public Facebook page.
Airline Seat Verification
Back in mid-October, we blogged about how the airlines are fighting friendly fraud with flight manifests containing seat verification information. Scammers often purchase airline tickets, fly to their destination, then inform their credit card issuer that they never made the purchase.
Now, however, credit card issuers have acknowledged that flight manifests and seat verification constitutes compelling evidence against scammers.
Online Dating Profiles
The online dating industry has long suffered from chargebacks and friendly fraud. One of the most common forms is when a married person creates a profile on an online dating site, gets caught by the spouse and offers the excuse of a hacked credit card number.
In such cases, the dating merchant can use the married individual’s online dating profile as compelling evidence.
3D Secure: An Effective Tool in Fighting Friendly Fraud
3d secure technology is no longer the disruption in the online checkout process. Instead, it is an effective tool for merchants in the perpetual war against friendly fraud, and also can lower a merchant’s risk profile.
Instabill offers 3D secure options such as MasterCard SecureCode, Verified by Visa, American Express SafeKey and J/Secure through JCB. Speak directly with one of our merchant account managers at 1-800-318-2713, or by selecting the live chat option below.
