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Buyers' Guide to
Online Payment Acceptance
Chapter 3: Chargebacks
& Fraud
Chargeback,
the word that Internet merchants fear. A
chargeback is what it's called when a transaction
is reversed. In other words, rather than adding
money to your account it is deducted. Chargebacks
can occur for a wide variety of reasons, such as
double-charging, credit card expiration, bank
error and customer disputes. If you get too many
chargebacks against you, there is a possibility
that you will loose your merchant account. Once
you've lost your merchant account you are placed
on the Visa/MasterCard MATCH list for several
years which all Merchant Account Providers have
access to, and if they find you on the list they
won't reissue a merchant account to you. If you
are one of those merchants who have lost their
merchant account, there is still hope. Bank Card Law specializes in helping
companies who've lost their merchant account
because of excessive chargebacks.
Here are some tips that can help you eliminate
chargebacks:
1. On your order confirmation page provide the
customer with the name, phone number, e-mail
address, etc., of your company so that they will
recognize it when it appears on their monthly
credit card statement.
2. Include this same company information in the
e-mail confirmation that your customers get when
an order is placed (they do get one don't they?
If not, they should... it's good for keeping
records.)
3. Use Address Verification. People ordering
products using a stolen card number will never
use the real cardholder's billing address, so
this is your chance to stop the order before it's
too late!
4. Scrutinize orders from foreign countries. A
large percentage of fraudulent Internet purchases
are made from Indonesia, Russia, and other
eastern block or developing countries.
5. If an order seems suspicious, call or email
the customer and attempt to verify anything you
can about them. Pay attention to strange orders
and then follow up.
6. And lastly, if you ship a product, include the
customers invoice. Always keep copies so if
you're ever challenged you have some kind of
defense.
7.
Be wary of accepting orders from people who used
a free e-mail address when ordering (i.e.
Hotmail, Yahoo, etc.). Tracking people who used a
free e-mail address is almost impossible, it's
much easier for them to get away then if they
used their Internet Service Provider (ISP) e-mail
address.
Unfortunately,
credit card fraud is very prevalent on the
Internet. The best thing that you as a merchant
can do to reduce the cost of fraud is to be
informed. I highly recommend that you dedicate
several hours to reading through the web sites
below and implementing as many of the suggested
strategies as possible into your e-business:
AntiFraud, includes a list of over
three thousand domains that are used for free
email which can conceal the identity of the real
customer.
Internet
Fraud Watch
10 Ways to Reduce
Chargebacks and Fraud
In
almost all cases you will be responsible when a
fraudulent credit card is used on your site, and
you will be charged for the sale. Authorities are
unlikely to get involved in a fraud case unless
very significant amounts are involved. However,
you should not hesitate to report each and every
case of fraud that occurs.
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