Chargeback frauds are common in transactions involving credit cards. Disputes occur when a customer notices an unfamiliar charge on their credit card history, and they may call the bank to reverse the charge. In most cases, the bank sides with the customer and reverses the charge against the trader. Chargeback fraud protection for merchants is essential as it prevents business owners from making avoidable losses.
Various occurrences can lead to chargebacks. These are;
- Legitimate disputes
These are situations in which customers experience problems with the traders that lead to legitimate chargebacks. The kind of problems that result in a dispute include errors in shipping and misplaced orders.
- Criminal frauds
It occurs when a stolen credit card is used in the purchase of goods and services. Credit card users intend to defraud the credit card owner. Preventing chargeback preauthorization can reduce criminal fraud.
- Accidental frauds
These are the type of errors that occur when a customer makes an actual transaction but does not notice the charge on the bank statement. In some instances, the fraud is intentional and aimed at making a company suffer financial loss. Friendly frauds can be prevented by looking into chargebacks post-authorization.
Protecting Businesses from Chargeback Disputes
How to dispute credit card chargebacks can be lengthy and costly for businesses. It is vital, therefore, to prevent the likelihood of reverse transactions. The following tips will help your venture avoid chargebacks;
Proper documentation of all credit card transactions
Receipts and signatures constitute sources of evidence in disputing chargeback claims. It is commendable to keep an excellent physical record of your business transactions. With the rising online transactions, it is advisable to adopt a technology solution that can help to keep records on card transactions. These records include the IP address, date, and time of transaction.
Consistency in the payment descriptions
It is commendable for traders to use a name that customers can recognize with ease. The name indicated on the charge should match the company name to save the company chargeback expenses in the long run. Inconsistency in the payment descriptions can make customers avoid making purchases from your company for security reasons.
Keeping up with the chargeback codes
Traders must remain up to date with the chargeback codes that keep changing from time to time. Chargeback codes provide evidence for the company in case a dispute arises. Following up on the chargeback reasons can also help a company to understand reasons for reversal requests and find a solution.
Prompt response to customer issues
With the rising incidences of friendly frauds, companies should adopt means of preventing fraud before it happens. Adequate and prompt customer support allows clients to get in touch with the traders directly and settle any concerns over the service, such as return policies and delayed delivery.
Timely response to all customer queries boosts the performance of businesses in the long run. Companies can indicate good return policies on their websites and provide answers to frequently asked credit card transaction questions. Businesses can also engage in process protocol education and build more communication lines with consumers for fraud protection.