Your business is thriving, and you're even thinking about scaling up based on how things are going.
But there’s a problem: you notice lots of chargebacks are being issued. It’s a small problem at first, so you let it go. Mistakes happen, right? Pretty soon, though, you realize it’s becoming an issue that’s costing you money. You know you’re sending the goods but you’re still losing money.
Unfortunately, this problem, known when it’s done purposely as friendly fraud, has become a problem across pretty much every industry online.
So, what can you do to stop it? Learn how to fight back against friendly fraud below with these six tips.
Friendly fraud takes place when a customer requests a chargeback after receiving a physical good when online shopping. The difference between friendly fraud and an honest chargeback is that some users honestly ask for their money back if they don’t receive a product. The chargeback system, after all, is in place to protect consumers.
But if you suspect it’s happening maliciously, fighting back is the only way to prevent it from happening again. According to Forbes, nearly 17 percent of consumers who have filed a chargeback (knowingly or unknowingly) committed first-party misuse. This costs merchants billions of dollars every year.
For retail and ecommerce stores, chargebacks can be a real issue, because it’s difficult to tell the difference between a legitimate claim and a fraudulent one.
Ultimately, your goal should be to root out friendly fraud before it happens.
Try as you might, it’s difficult to keep up with the complexity of cyber crimes and shady online activity. The scams and schemes people run get more complex by the day.
A chargeback management solution works securely and swiftly to root out chargebacks before they happen. Analytics and chargeback management ensure you have the information and team of experts in your corner to fix problems if they do occur.
You’ll have greater peace of mind and more time to run your business by enlisting the help of a trusted digital solution.
If you decide to go it alone, there are still things you can do to fight friendly fraud. In lieu of a trusted chargeback system, your best bet is to create a strong paper trail.
It’s not easy keeping track of every transaction, but having access to transactions that are dated can help you show the bank when a purchase is legitimate.
Speaking of financial institutions, your relationship with your local credit union or a big-name bank/credit provider matters when fighting friendly fraud. They are ultimately going to be the one you need to get on your side.
Remember that the bank or credit provider’s responsibility with chargebacks starts with the consumer. The chargeback system was designed to protect consumers.
Therefore, it’s your job to be timely, professional, and organized when disputing them. (That’s another reason documentation is so important.)
It’s a sad truth that some business owners just assume false chargebacks are, literally, the cost of doing business. That isn’t the case. You have a right (and deserve) to get your money back if you honestly shipped the product.
But if you wait too long, it might be too late. Banks look at diligence and consistency for things like shipping times when they rule in the business’s favor. Dispute chargebacks as soon as you see them to give yourself the best chance possible.
Goods being repeatedly ordered to the same address and same name could be a sign of friendly fraud. But during the holiday season, tracking friendly fraud chargebacks can be even more cumbersome.
In some cases, chargebacks are associated with gifts, so a different address or name may make it difficult to prove. Keep an eye out for the same last names, maiden names, or street addresses when trying to prove chargeback fraud.
Actions should bear consequences. Keep tabs on the names of those committing fraud against your business. Mistakes happen, but if you conclude the person knows exactly what they’re doing, blacklist them from your business.
If you live in a community or run a business in an industry that’s being hit hard by chargeback fraud, organize a communal blacklist for your colleagues, peers, and competition. Working together to solve friendly fraud issues can help weed out repeat offenders.
As you can see, it’s a lot of work to fight back against friendly fraud. Contact us today to see how our solutions can protect you.