If you’re an online merchant, you have no choice but to protect your e-commerce merchant account from chargebacks year round, but especially during holiday season. The holiday shopping rush covers both ends of the emotional spectrum. On one end, you’re gearing to sell, sell, sell and capitalize on the busiest time of year. On the other end, you’re likely dreading dealing with any chargebacks, some possibly fraudulent and others where the customer doesn’t realize the damage s/he is doing.
Looking on the bright side, since Visa halved its chargeback tolerance nearly two years ago, merchants have no other choice but to step up their chargeback mitigation due diligence, especially merchants in industries plagued by chargebacks such as mail order/telephone order or subscription products.
Thus, with the holiday shopping soon to reach a fever pitch, consider the following strategies to both prevent chargebacks and to prove chargeback fraud.
Consider a 3D secure e-commerce merchant account
3D secure, we believe, got a bad rap when it was first introduced. The most popular complaint was how it was a detour to shopping cart abandonment, which, knowing how it worked, we could understand. 3D secure 2.0 is much more user friendly to e-commerce merchants now (check out Cardinal Commerce’s study with Amtrak’s use of 3D secure).
If yours is a business that is plagued by chargebacks, 3D secure might be your primary deterrent.
Maintain (and organize) those shipping receipts
Did the customer sign for the package? Shipping entities such as U.S. Postal Service, UPS and FedEx maintain records of such and offer e-mail notifications of each step of the shipping process (merchants should opt in for all of them). Even if a fraudster allows delivery without a signature, these are small pieces of evidence that can work in your favor.
Using social media…and screen shots
Enjoy playing detective as a youngster? Here’s your chance to relive those days. Social media can be an excellent tool for proving a case of friendly fraud or chargeback fraud. Surprisingly, fraudsters, more often than not, enjoy posing with their wares on their social media channels. Taking a screenshot screen shot of a fraudster with product is practically indisputable.
Make time for manual reviews
Manual reviews have become a necessary part of an e-commerce merchant’s workday. With Visa and MasterCard’s 1 percent/100 per month threshold, merchants cannot afford not to perform manual reviews. There are many red flags, such as:
- A bulk order of the same product shipped to the same address
- First-time orders from global locales which are known for fraud activity
- Odd-looking e-mail addresses with long prefixes such as [email protected]
- Different shipping and billing addresses
- Many purchases of different products with one credit card
- Attempted purchases with an expired credit card
Partner with a chargeback management firm
Over the last 7-8 years, the emergence of chargeback management firms tell the story: The card issuers collective tolerance for chargebacks is lessening and chargeback fraud/friendly fraud is increasing. There is a misconception about chargeback management companies, however. E-commerce merchants, are often lukewarm to hiring them, claiming they’re unaffordable and wondering what the result will be. It’s a common (and understandable) belief.
What merchants need to think about, however, is that chargeback management firms are recovering your lost revenue and, some firms will educate merchants in the process, enabling them to manage themselves.
Protect your e-commerce merchant account – Get educated
A provider of e-commerce merchant accounts to high and medium risk businesses, Instabill is not a chargeback management company, but does have resources to which merchant can refer. Our satellite website, Instabill.org, is a free online resource that details the chargeback process from A to Z and offers a plethora of tips and tricks to protect your e-commerce merchant account from chargebacks.
What is your best chargeback prevention strategy? Is it 3D secure? Manual reviews? A chargeback management firm? Leave us a comment below.