The global e-commerce market is valued at $5.9 trillion. This year, the number of online shoppers is expected to increase. For sellers, this is a lucrative market.
However, you will face stiff competition from other sellers. You will have to work tirelessly to attract and satisfy your customers.
To market your products and grow your business, you have to invest. At the same time, you have to start tightening your security. You have to be aware of possible business threats like chargeback fraud.
But what is chargeback fraud? How do you prevent it? Here is what you should know.
What Is Chargeback Fraud?
Chargeback fraud is a form of identity theft that occurs when a criminal uses a stolen or counterfeit credit card to make or create a purchase. The criminal then claims the purchase was not authorized and requests a refund from the merchant. When the merchant issues the refund, the criminal is able to retain the goods while still receiving the benefit of the refund.
This form of fraud is especially damaging to businesses because it results in a financial loss. And it also adds additional transaction fees that can quickly add up.
The merchant is also required to still pay the credit card processor, meaning that credit card payment reversal is hard to do once the fraud happens. They still have to comp for other transaction costs associated with an unauthorized purchase. This includes things like online payments for cam sites.
How Can You Prevent It?
While fraud cannot be totally eliminated, there are ways to mitigate them. Here is a list of how to prevent them:
Understand Chargeback Fraud
Understanding the various types of chargeback fraud, such as friendly fraud, merchant fraud, and fraudulent use of stolen cards, is important. This can help you prevent it and protect yourself from losses.
Identify Chargeback Fraud Patterns
To prevent chargeback fraud, you need to be able to identify and recognize potential fraud patterns. You need to pay particular attention to the customer’s behavior during the purchase process. Look for red flags such as abrupt changes in billing address or sudden spikes in buying activity.
A common sign is if a customer requests a refund for a product or service they have purchased but not received. You should be wary and investigate further into the transaction.
Use Fraud Prevention Technologies
Using fraud prevention technologies is one of the leading solutions for protecting against such fraudulent activity. With their various measures, you can be assured of advanced monitoring and analytics. You will have customized fraud strategies and accurate detection of chargeback fraud.
Enhance Visibility Through Chargeback Monitoring
You need to have chargeback management software. This can help identify suspicious purchases, track transactions, and report any discrepancies in purchases.
You should also set up internal procedures for reviewing and challenging suspicious transactions. This should include a comprehensive system for fraud detection and chargeback mitigation. This will help identify and stop fraud before it occurs.
Follow Our Guide to a Successful Business
Chargeback fraud is a type of cybercrime and financial loss that can be detrimental to your business. Adopting a chargeback prevention solution to protect your business should be a priority.
Act now and integrate a real-time fraud monitoring system. This will ensure that malicious activity doesn’t impact your business operations.