Friendly fraud can cost businesses valuable time and money and can be hard to combat. Learn the basics of proper fraud management with these tips.
According to statistics, friendly fraud is responsible for up to 76% of chargeback disputes.
Friendly fraud is when a fraud chargeback request is made by the card holder whether intentionally or unintentionally. For example, perhaps they made an online purchase and later, they did not recognize that resulting in an unintentional chargeback. If you are an eCommerce company, chargeback fraud can eat into your bottom line significantly. Not only can chargebacks impact revenue and incur hidden costs, but they can also trigger exorbitant charges.
Our Card-Not-Present fraud report revealed that 10-13% of eCommerce transactions are potentially fraudulent.
Is your business is incurring a high volume of chargeback transactions? If so, networks might flag you for high chargeback rates. This can increase your fees by as much as $25 fee for every chargeback incurred.
The solution? Comprehensive fraud management platform.
Continue reading to find out how you can start effectively dealing with fraud and lower the amount of friendly fraud orders.
Include Your Business or Store Name in the Descriptor
An important step in chargeback fraud management is to include your business name in the descriptor. This makes it easy for consumers to identify payments to you.
This won't stop an intentional friendly fraud perpetrator. However, it will help to prevent customers from reporting chargebacks because they don't recognize the charge on their credit card statement.
Optimize Customer Experience and Increase Customer Service Communications
Ensure that you offer a delightful and enhanced experience throughout the entire customer journey, not just at the point of purchase but up until the order is delivered. Increase your customer service communications and notifications post purchase, including very clear delivery confirmations. Another method to prevent unintentional chargebacks is to be sure your customers know how to reach out for questions or how to being a return process.
Leverage the Power of AI
Making sure your store name appears in descriptor fields on a statement can deter unintentional chargeback fraud. But these steps aren't effective for intentional friendly fraud management.
The best way to stop intentional chargeback fraud is through advanced machine powered software solutions. These solutions can identify fraudulent transactions before you approve them.
Last year chargeback fraud grew by 32%, and it's likely to get worse before it gets better, especially in emerging markets. Leveraging Artificial Intelligence (AI) to eliminate the cost of friendly fraud is a business investment that will yield a return far into the future.
Without AI, there are manual methods businesses can use to start identifying fraud with direct linkage. For instance, if multiple orders for the same item come in at the same time from one email address, this is a red flag businesses can identify and act on.
However, indirect linkage fraud is becoming increasingly common. It is also almost impossible for eCommerce businesses to spot without the help of artificial intelligence.
Indirect linkage occurs when there is no single data point connecting linked orders.
Fortunately, AI is capable of identifying fraud with indirect linkage.
Here at Vesta, we use advanced machine learning to dramatically increase legitimate sales approvals. At the same time, Vesta prevents the cost of chargebacks and other digital fraud.
Do You Need Help with Fraud Management?
Given how rampant and costly chargeback fraud is becoming, thorough fraud management is a vital business investment.
Through machine learning backed by 25 years of global data, Vesta effectively combats fraud for eCommerce businesses. Our AI is so powerful, and our models so accurate, that we approve 97% of all transactions for our customers.
Our Payment Guarantee solution also assumes 100% responsibility any transactions it approves that result in chargebacks. With Vesta, you can eliminate the cost of fraud.
Ready to drop your fraud costs to zero? Request a free demo today.