How to Stay on Top of Fraud and Chargebacks

Online FraudIf you want to say goodbye to the risk of losing money unnecessarily through hosting an online shop, here’s 9 simple points that you should consider:

1. Pay Attention to Detail – Verify the address of the shopper, ring the phone number provided, research the IP address, validate the email address and compare names. Watch for charges from places that have one billing address but a different shipping address. While some buyers operate a large business necessitating different addresses, it’s also often a sign of fraud. Be particularly wary if the two addresses are in different countries. Reject any credit card that has expired or that is declined. The cardholder may have an explanation, but this is not your problem. Rejected or expired credit cards are much more likely to incur chargebacks, and you have every right to insist on a card that is valid.

2. Scan orders for Fraud Trends – As you review the order, bare in mind that stolen cards can only be used for a certain amount of time, so fraudsters hit them for all they are worth, as quickly as they can. Fraudsters also go for goods that are easy to re-sell and are usually glad to send a courier service to collect.  Most fraudulent orders specify next day or express delivery.  Watch out for orders from or delivered to absurd countries or countries of high risk. Be aware of high value sales as customers rarely purchase large or expensive order online. Newly launched sights are targeted by fraudsters. A shopper that fails to specify important fields such as size, colour or model may well be fraudulent. Multiple orders on one day should also be investigated.

3. Know How to Act if an Order is Suspicious – Contact the client immediately and obtain additional contact details. Then you should try to verify details related to why you are suspicious. You can opt to decline the order based on the terms and conditions you subscribe to. If you do so, the refund must be performed as soon as possible. Report online crime to both your bank and the SAPS Commercial Branch.

4. Offer Great Customer Service – Your shopfront should offer clear and truthful product info so that the customer is not mislead. There should be rigorous cross checking of the exact order before shipping. Products should be safely packaged and shipped by a reliable shipping company in the agreed timeframe. Good customer service means that the customer receives his order exactly as expected and conveyed through the shopfront.

5. Keep a Detailed Paper Trail – Authorize every transaction electronically and keep careful paperwork for all your sales. Clear records and up to 3 years of history will only be to your benefit. This will allow you to verify sales properly, which will not only avoid chargebacks but also give you a viable paper trail for addressing those chargebacks and fraud investigations that do occur.

6. Respond Promptly to Banks Requesting Info – As the legal investigation is bound by timeframes, if you are slow you will mean that a chargeback will automatically be issued if you do not provide the correct information. The appeal this will end up in a lot of admin costs that no merchant would want.

7. Issue Refunds and Replacements Promptly – Give the customer a refund or replacement quickly if asked. Even the best services sometimes produce defective products, and every business will run into a few customers stricken with buyer’s remorse. The smoother and more efficiently you handle a refund or replacement request, the better chance you have to avoid chargebacks.

8. Consider Shipping before Charging – Ship your merchandise before you formally charge the cardholder. Many businesses charge first and ship later, which creates chargebacks whenever problems arise getting the merchandise out. Set up your system so that you charge the credit card right after the product has been sent, not before. You can avoid a lot of chargebacks this way.

9. Sharpen up your shipping – Use only reputable courier services. Never deliver to third parties such as taxi drivers and messengers or to third party addresses such as a temporary address.

No one wants to run into fraud and so the final piece of advice is to simply stay up to date with latest news, technology and information related to avoiding deception online ploys!

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One Response to “How to Stay on Top of Fraud and Chargebacks”

  1. Jermaine 07. Jun, 2011 at 3:15 am #

    Great write up. this is an important article for owners of online stores. always ahead of things, thank you Shopdirect.

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