Credit Card fraud is and always will be a concern for businesses. What many businesses may not know is how “Friendly Fraud” is now making up to 75% of all chargebacks. What is Friendly Fraud? The definition of Friendly Fraud, also known as first party fraud is defined as this by Fraud.net:
“An actual consumer obtaining goods or services from a business, then claiming they did not make the purchase, did not receive the goods; the service was not completed or only received a fraction of the ordered items.”
Though some Friendly Fraud is the result of forgetfulness, a family member making an unknown purchase, or simply not understanding of return policies, the practice allows amateur fraudsters a low risk way of getting something for nothing.
As most businesses know it is the consumers’ credit card issuer that makes the final decision on a chargeback and these decisions tend to always go towards the consumer. However, this does not mean that businesses always lose. There are several ways for a business to protect itself from Friendly Fraud and chargebacks in general.
1. Have a clear return policy.
Post it in your store and online to help customers understand their options.
2. Provide an email address and phone number with your contact information.
If customers can reach out to you directly, they’ll be more likely to do that before filing a dispute.
3. Include detailed product descriptions on your website.
The goal is to make sure products are represented clearly and accurately.
4. Avoid keying in credit card numbers whenever possible.
Transactions that are swiped or make use of EMV chips are much more difficult to dispute. Plus, your processing rates will typically be lower for these more secure payment methods.
5. Always get a customer signature for card-present transactions.
A signature is just one more way for you to show the charge was legit and intentional.
6. Use address verification services (AVS) like zip code and CVV codes for card-not-present transactions.
Continuing the theme of super-secure transactions, these additional bits of information make your charges that much more solid.
7. Make sure your merchant account has an accurate payment descriptor.
Be sure it includes your business name and phone number, for example. Customers should recognize your business name on their credit card bill.
8. Use shipping insurance or shipping confirmation to help you track the receipt of products.
That way you can prove shipped goods were delivered.
Always ask your provider to help you when you receive a chargeback. For more information on how to safely accept credit cards go to: https://www.acceptcreditcardsus.com
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