Preventing Friendly Fraud

The first thing people think of when they think of fraud is definitely not the word friendly. Friendly fraud, however, is a term used to reference a specific type of chargeback fraud.

Chargebacks that are fraudulent are increasing, presenting issues that need to be addressed by e-commerce merchants. Losses of over $30 billion have happened due to chargebacks each year, which is only a reflection of the actual transaction amounts pertaining to the chargebacks. There is also additional money spent on dealing with chargebacks, as well as the costs of time and labor used when addressing the issue.

Even though some chargebacks are legitimate and cannot be avoided, friendly fraud chargebacks should be disputed with vigor. These types of chargebacks, friendly fraud, are often a part of initially legitimate transactions. If a customer fails to recognize a charge on their bank statement or regrets their purchase at a later point, they may get in touch with their bank to have the charge reversed without going to the merchant first. While they could ask for a refund or inquire about the charge with the merchant, many people go straight to the bank. The fraud part of the charge might not be intentional, but since the consumer is misusing the process, it should be addressed.

Banks have eliminated fees, as well as minimum required payments associated with chargeback requests, to keep their customers happy. Due to banks making it easy to ask for a chargeback, some customers use it as a go-to response if they regret a purchase or unfamiliar with where the purchase came from when they see it.

How To Prevent Friendly Fraud

Almost all purchases could end up being a friendly fraud transaction. This is because friendly fraud stems from valid transactions. Security measures that are in place, such as CVV and AVS, do not prevent it, and even longtime customers can do it. There are things merchants can do to reduce the likelihood of this type of fraud occurring.

Making Descriptors Easy To Identify

When people look at their credit card statements, if they do not recognize where the charge came from, they are more likely to think it is a transaction that shouldn’t be there. By making your store name or business name recognizable and part of the descriptor that shows on their statements, consumers can easily see the origin of the charge and identify where it came from.

Maintain An Ethical Business

Be transparent about what your customers are getting and set realistic expectations about services and products that you provide. Customers who feel misled may feel that it is pointless to come to you first to take care of issues that they have. By avoiding making promises about your services or products that do not hold up, you could see fewer chargebacks and less friendly fraud overall. Also, customers are more likely to treat your business ethically if you are honest and ethical with them.

Offer Fantastic Customer Service

By offering excellent customer service, 24/7, you can decrease the amount of friendly fraud coming your way. By resolving customer complaints quickly and efficiently, customers are less likely to try and resolve their issues at the bank. This is beneficial to you as a merchant, allowing you to deal with situations before they become chargebacks.

Order Fulfillment And Return Shipments

While delays in shipping can happen, if shipping delays are too long, a customer may start to doubt the shipment is coming at all. If this happens, they have a much higher likelihood of requesting a chargeback. The speed at which you fulfill orders can help, as well as having tracking on the items. Returns should also be tracked to help expedite the process and get refunds to customers more quickly.

Also, having methods of communication with your customers that are easily accessible and have a faster response rate can be helpful in reducing chargebacks overall. Notifying customers when orders are processed, as well as when recurring payments are being charged, both in advance and after the transaction occurs, can decrease chargebacks.

Should I Outsource?

Some companies are better with fighting chargebacks than others, and MobiusPay has fantastic services and information that are not only cost-effective but are efficient. Finding a company with these qualities is important. The team is happy to answer questions you have about chargebacks and how to prevent friendly fraud. Find a worthwhile and cost-effective approach to dealing with chargebacks. MobiusPay can assist you in answering questions about the tools you need and how to adopt the practices you need to battle friendly fraud successfully. Also, find out how to get immediate responses to incoming chargebacks by using services that suit your needs.

Final Notes

Friendly fraud is something that businesses will continue to have to deal with. By using the top ways to deal with chargebacks and prevent them from cutting into revenue, companies can be better off. By using the right kind of evidence, knowing how to fight friendly fraud, and having the best tools to do so at your disposal; you can deal with it in cost-effective ways.

 To learn about all the tools and services that MobiusPay can provide to help combat against all fraud, contact us to speak with one of our experienced representatives TODAY!

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