Managing Chargeback Fraud for Your eCommerce Business

The benefits of having an eCommerce business in the digital age are endless. However, with the advent of fast and accessible shopping comes a series of risks surrounding security and efficacy. Among those difficulties are site and online store security and consumer transaction authentication. This is commonly known as chargeback fraud.

Chargeback fraud occurs when a customer applies for a refund after receiving goods. You can prevent fraudulent chargebacks by knowing how to detect them and by strengthening customer authentication. You can also hire a company that specializes in fraud and chargeback prevention and management.

To properly understand the issues surrounding chargeback fraud, it is important to review the different types. Many businesses and business leaders assert that there are two types of chargebacks--service-related and fraud-related chargebacks .

Service-Related Chargebacks

Service-related chargebacks are a concern for service-based industries. This type of chargeback is a bit more complicated than fraud-related chargebacks. The complexity of service-related chargebacks is that the customer is not denying the charge but rather claims they did not receive the services they contracted for.

Fraud-Related Chargebacks

Fraud-related chargebacks are a simpler type of chargeback and are easier to prove. Fraud-related chargebacks occur in two different ways. If the customer did not authorize the purchase, then it is considered fraud and they can easily get a refund.

The second way is if the customer purchased a product and it either never arrives or the company provides an inferior product or the wrong product. The company could deny this but the bank will usually side with the customer.

These types of chargebacks are a big problem for eCommerce businesses. The safety and security of your customers’ information and the ability to properly authenticate a transaction is why businesses need a strong eCommerce chargeback management company. A company that provides chargeback management services can offer you several services. These include resolving chargeback disputes before the reply date deadline, which increases your chargeback win rate, giving you regular reports for better fraud management, and more.

Preventing fraud during customer authentication is the best approach. The authentication process should meet PSD2 SCA requirements. Strong Customer Authentication (SCA) is meant to ensure that a customer’s or client’s payment is secure to reduce fraud. To meet these requirements, businesses should include additional authentication to the transaction process.

While business owners need to be vigilant about website security, it can be difficult when there are constant threats. Therefore hiring a fraud management service is the most effective solution.