If you operate an eCommerce business, chances are good that you've been the victim of chargeback fraud at some point.
There are two primary types of chargeback fraud that merchants will encounter: friendly fraud, and true fraud. Both can be equally detrimental to your business, but it's important to understand the difference between the two in order to properly identify and prevent them.
Friendly fraud is something that millions of businesses deal with every day. It's when a legitimate customer makes a purchase with their debit or credit card and then disputes that purchase without a legitimate reason.
There are three primary causes for friendly fraud:
When someone commits true fraud (also referred to as criminal fraud), it's done to deceive the merchant. This is similar to friendly fraud, but conducted with malicious intentions. The person filing the chargeback claim knew that the purchase was legitimate, but opted to file a claim so they could receive the refund.
Leigitimate customers will do this in the hope of getting something for free. Fraudsters will do this to take advantage of unsuspecting businesses.
Friendly fraud is the type of chargeback fraud that's done without malicious intent. Customers dispute these transactions for several reasons, as mentioned above.
The fraud protection systems that businesses use face a challenge. These systems are great at detecting fraud but there is no way for them to detect the motive behind the fraud. As a result, businesses can't tell the two types of fraud apart when looking at their books.
The first step businesses can take in preventing chargeback fraud is to investing in a fraud solution that offers chargeback reimbursement protection. Vesta Payment Guarantee offers a zero-fraud-liability guarantee that completely protects a merchant's revenue from all fraud chargeback liability.
If Vesta approves a transaction, and the cardholder files a fraudulent chargeback claim later, we will cover the loss and any associated fees. With chargeback reimbursement protection, you can completely eliminate the worry of chargebacks.
Vesta's end-to-end transaction guarantee platform can help your business make chargebacks a thing of the past. Our fraud decisioning models are trained on over 15+ years of purchase data, giving your business the most accurate method for approving or declining transactions. We believe that over time our technology will help drive the cost of fraud to zero on a global scale.
If you'd like more information about our platform, contact us today. We'd be happy to put our team to work for you and your business.