eCommerce Fraud Management

eCommerce Fraud Management: Best Practices

Whether you’re planning to start an online business or are already an eCommerce veteran, fraud management is a big concern. There are a few different types of fraud you should be aware of, including Chargeback, Friendly, and Buy Online/Pick Up in-Store schemes. While it may be impossible to avoid all instances of fraud, following a few good fraud management best practices will go a long way toward protecting your business.

Here’s what you need to know about these types of fraud.

Chargeback Fraud

Keeping track of chargebacks is essential if you want to avoid losing your merchant account. In order to prevent chargeback fraud, you should have a strong quality control system as well as keeping good records of all customer interactions with your business. Chargeback fraud can add up and be expensive, but there are several things you can do to reduce this type of fraud.

Ensure that you provide clear return and exchange information. Make sure that your return policies are clear so that there is no confusion about what can and cannot be returned, how long the customer has to return the item, and how your exchange process works.

Keep track of postal deliveries. A lot of chargeback fraud happens when a customer claims that they never received a package. Check whether a customer frequently changes their mailing address or billing address — that can be a red flag. You may also want to consider using video footage or a photo of the item when it was delivered to the customer’s location to prove that a customer actually received it.

Be aware of organized retail crime rings. These groups order large amounts of merchandise using stolen identities to resell at a profit. Not every large order of multiple items is a fraudulent purchase, of course, but being aware of this practice could help you recognize suspicious patterns.

Friendly Fraud

Friendly fraud is an increasing problem that occurs when a customer doesn’t receive the items they ordered or decide they don’t want them, and then file a chargeback. These chargebacks are very costly to your business because in addition to the cost of refunding transactions, you can lose revenue on legitimate purchases.

Maintain good relationships with your customers. This is important if you want to prevent eCommerce friendly fraud. You can’t stop your customers from making claims, but you can do a lot to make sure they are honest. One of the best ways to do this is to make your customer service team easy to reach. Providing tools such as a customer service phone number, an email address, and perhaps an automated chat bot will allow customers to contact you and correct mistakes before they issue disputes.

Automating recurring payments can reduce the chance of mistakes. When you enable automated recurring payments, you reduce the chance of your customers making entry errors. You can also send email confirmations to customers for large purchases, as well as send confirmation email messages or text alerts. This gives customers the option to review their order, which will prevent chargebacks.

Be sure to include a customer signature option for all shipped orders. When the recipient signs the delivery receipt, it provides a paper trail. This reduces friendly fraud and allows you to refund the customer without getting the credit card issuer involved.

Buy Online/Pick Up in-Store Fraud

Despite the fact that many customers consider online shopping to be safer than going into a physical store, fraudsters are still finding ways to exploit it. Here are some things you can do to reduce your risk.

Set clear expectations for your customers. For instance, you should be clear about the delivery method, time of delivery, and delivery address. These factors should be emphasized during the checkout process.

Clearly spell out your return policy. For instance, you can reduce the number of returns allowed and extend the time for which items may be returned. This will reduce the likelihood of fraudsters trying to return goods that are already marked as unreturnable.

Require identification from the person picking up a purchase. While this is not required by law, doing this ensures that the person attempting to pick up the item is indeed the customer.

Fight eCommerce Fraud With the Right Tools

Having the right tools onboard will go a long way to help keep your business safe. For instance, Verifi is a Visa solution that offers real-time dispute resolution. It works as an intermediary to help merchants directly resolve disputes with customers. This tool employs robust authentication protocols and benefits from military-grade security.

Ethoca Alerts, the Mastercard solution, uses cardholder dispute information and confirmed fraud data gathered from a substantial network of Issuing banks, enabling Issuers and merchants to access and exchange data in real time. Because the system sends millions of chargeback alerts to merchants every year, merchants can issue refunds to their customers without having to go through a complicated and time-consuming claims process. This can also save you money because the Acquiring bank is not notified.

When you partner with Cartis Payments as your merchant services provider, you benefit from having access to both Verifi and Ethoca Alerts as part of our suite of fraud prevention tools and services. No matter what kind of eCommerce fraud threatens your business, you can be confident knowing that the Cartis Payments has your back!