Chargebacks911 Warns Internet Merchants of Growing Trend: “Friendly Fraud” ChargebacksApril 18, 2013 No Comments
(Tampa Bay, FL) April XX, 2013—One of the biggest challenges facing online merchants today is a rapidly growing trend in the realm of Internet sales fraud. Scammers have recently chosen a new route to fool businesses—“friendly fraud,” an illegitimate type of chargeback or card dispute. “Friendly fraud” consists of consumers making an online purchase and then contacting their bank, stating that the transaction was not their doing, resulting in a chargeback. Chargebacks911, a company established by a former online retailer that specializes in servicing merchants, consumers and the majority of banking institutions, handles “friendly fraud” and other chargeback issues to quickly resolve disputes between cardholders and merchants.
According to recent survey results, the incidence of Friendly Fraud (among chargebacks) has increased from 23% to nearly 70% in the past three years alone (1). The growth rate appears to be linked to the growing use of card-not-present transactions. Traditional brick and mortar retailers are being quickly replaced by a fast growing Internet marketplace, which leans heavily on the use of keyed-in credit card transactions where no physical customer was present. Whether due to ignorance or actual intent to defraud the merchant, consumers and credit card companies can leverage the loopholes provided through the chargeback vehicle to dispute a non-traditional electronic transaction, resulting in the creation of greater liabilities for all parties involved.
Increased chargeback costs equate to higher prices to the consumer, increased fees paid by the banks, and more risk in the eyes of the transaction Processor. What was developed as a check and balance safety valve, designed to keep merchants honest, has been rapidly morphing into a no-win vicious cycle between banks, merchants, and the actual customers related.
Chargebacks are a frustrating aspect of Internet sales, as merchants typically lose revenue with each charge dispute. “Friendly fraud” thrives in the Internet sales market due to the lack of physical authenticity of the transaction.
According to Chargebacks911, a merchant can never guarantee that the business won’t receive a “friendly fraud” chargeback. However, merchants will benefit from being as prepared as possible.
Chargebacks911 supplies online vendors with three helpful tips to help prevent “friendly fraud”:
1. Engage in more communication – less in not more on this topic. Provide your customers multiple opportunities to easily contact you, and handle their resolutions, as quickly as possible.
2. Require a signature upon delivery of goods. The signature, in addition to information gathered online, helps relieve merchants of any wrongdoing in the resolution of chargeback disputes.
3. Keep customer records and account history to track suspicious activity and lower the risk of accumulating chargebacks.
Chargebacks911 provides solutions that not only help recoup the loss of funds as a result of increasing chargebacks, but also help to curb future chargebacks so that merchants can retain processing abilities.
Chargebacks911 was developed specifically for merchants to offer immediate aid to charge disputes and allow them to focus on their core business of selling and servicing their customers. Chargebacks911 specializes in servicing merchants, consumers and the majority of banking institutions.
Co-founder Monica Eaton-Cardone established Chargebacks911 in September, 2012, out of necessity, after many years as a merchant struggling to find a solution to chargeback issues. Chargebacks911 was developed specifically for merchants to offer immediate aid through proprietary technology, and provides the necessary function that gives merchants the freedom to focus on their core competency and optimize their in-house skill set. Chargebacks911 specializes in servicing Internet merchants, and offers both response and resolution services for chargebacks and cardholder disputes. The company works with merchant clients to help them keep their dispute rates down and retain their ability to accept credit cards. For more information, visit http://chargebacks911.com/.
1. “‘Friendly Fraud’ a Hassle for You, Too.” Nbcnews.com. NBC News, 19 Nov. 2010. Web. 24 Mar. 2013. redtape.nbcnews.com/_news/2010/11/19/6345525-friendly-fraud-a-hassle-for-you-too?lite.