Chargeback Protection

These are free or low-cost tools that help verify buyers’ identities prior to completing a transaction. Some commonly-used tools include:

• Address Verification Service: AVS automatically checks the transaction billing address against the address registered with the bank.
• Card Security Codes: CVV codes are printed on the card and cannot be stored elsewhere. Without the card, fraudsters won’t know the code.
• 3-D Secure 2.0: 3DS2 is the technology behind automated fraud detection programs that compare over 100 data points to verify the buyer as the actual cardholder.
• Fraud Blacklists: These help by blocking sales to known or probable fraudsters, based on anything from an IP address to the purchaser's location.
• Velocity Limits: Velocity limits (or checks) scan for potential fraud based on how quickly a buyer submits multiple transactions.

Fraud scoring uses machine learning to examine each transaction to try and identify traits and trends associated with suspicious behavior. It then provides simple up-or-down decisioning as to whether transactions should be accepted, rejected, or manually reviewed.

You can submit flagged transactions to manual review. You also set fraud scoring technology to automatically reject transactions that do not pass.

Improving customer service procedures and optimizing logistics and fulfillment will increase loyalty and build better customer relationships. In the process, you also make it less likely that cardholders will turn to a chargeback. We recommend adopting all the following practices:

• Personalize the customer experience.
• Provide live, round-the-clock customer service.
• Make live service easily accessible by phone, email, and social media.
• Offer free, “no questions asked” return shipping.
• Ensure all staff are properly trained on customer service best practices.
• Be transparent about costs, shipping times, etc.
• Always look for opportunities to optimize and improve the customer experience.

Chargeback alerts allow merchants to refund transactions, thereby avoiding chargebacks. Network affiliated banks will notify you of a pending dispute before a chargeback is filed. You then preempt the chargeback by refunding the cardholder.

Chargeback alerts can lower chargeback issuances up to a 20% in a matter of days. The Chargebacks911 Alerts Management Platform combines CDRN notifications and Ethoca Alerts with our own proprietary network for the most comprehensive coverage.

Like chargeback alerts, network inquiry tools allow you to intercept disputes before a chargeback is filed. Unlike alerts, however, automated inquiries offer resolution options beyond just issuing a refund.

If a customer contacts their bank about an unrecognized charge, banks participating in a network inquiry program can request additional transaction information in real time. If the new data doesn’t refute the claim, a refund is automatically issued. Either way, potential chargebacks are preempted.

Stripe Chargeback Protection is part of the company’s AI-driven fraud detection system, Stripe Radar. The system flags high-risk transactions and requires those users to provide additional identification. Then, if your business faces a fraudulent dispute, Stripe will cover the disputed amount and waive any dispute fees. This only applies if:

• Your account is in good standing.
• The charge in question is eligible for coverage.
• You are below Stripe’s protection limit (currently $25,000/year).

Additionally, Stripe handles all aspects of challenging the chargeback. You will not even be required to gather evidence. Stripe Chargeback Protection costs 0.4% of the total transaction cost, per transaction.

PayPal Seller Protection offers liability coverage in the event of claims, chargebacks, or reversals that are a result of unauthorized purchases or “item not received” chargebacks. For other transactions, PayPal typically assesses a $20 fee in the event of a chargeback.

PayPal also offers an opt-in service called Chargeback Protection. If a cardholder disputes a charge on a card transaction processed through PayPal, the company will reimburse eligible merchants. Sellers must pay a higher rate (currently 0.40% of the transaction cost per approved transaction) to receive Chargeback Protection.

Square is another platform that seeks to identify and proactively stop fraud before it happens. The company’s basic chargeback protection program includes fraud screening, as well as a limited amount of other chargeback protections.

After receiving any requested information, Square will work with the bank to resolve disputes. While provided at no charge, note that this protection only covers $250 in sales each month. Also, the coverage does not extend to transactions involving “high risk” items.

Shopify doesn’t claim to have actual chargeback protection for merchants at this time. However, the platform does offer Fraud Protect, a technology that proactively identifies potential fraud. Using advanced algorithms to analyze and accurately identify fraudulent orders, Fraud Protect classifies transactions as either "protected" or "not protected".

If a dispute is filed on a protected order, Shopify reimburses you, then actively works with the bank to resolve the issue. Chargebacks on non-protected transactions have a fee of $15 (US). There is also a small fee per protected transaction. Also, there are hundreds of available protection apps that integrate with the Shopify platform.

eBay Seller Protection offers a limited amount of protection to sellers. Buyers who have an issue with an eBay transaction are allowed to file a dispute. If no resolution can be reached between the buyer and the seller, eBay will intervene. If eBay decides in the customer’s favor, the buyer will be reimbursed, and the company will recover the funds from the seller.

This protection, however, is limited to disputes within the eBay platform. If a customer files a bank chargeback, eBay steps out of the picture. The company says it will aid the seller in gathering evidence to defend against the dispute. Overall, though, eBay takes no responsibility for disputes from the bank.