How Can Processors Help Prevent Chargebacks?

Processors Provide Tools to Help Merchants Retain Revenue

Merchants may sometimes feel like they’re alone in the fight against eCommerce fraud. However, that’s not the case.

Each of the major credit card networks offers a range of tools to help merchants prevent fraud, such as Verified by Visa, AVS, and CVV. In addition to these preventative measures, merchant processors also offer a selection of technologies which can help prevent revenue loss.

Black List

First, merchants can work with their processor to develop a black list. This bans certain individuals from making purchases with your company. For example, if you come across a potential fraudster, you can block his or her IP address or email address, and they can no longer make purchases through your store.

Merchants can also expand their black list to cover a broader range of customers if they choose. Certain parts of the world, such as Indonesia, India and a number of different nations in West Africa and Central America, are well-known epicenters for fraud activity. If a merchant want to get particularly aggressive toward fraudsters, they can block entire countries or regions.

White List

In contrast, a white list is essentially the opposite of a black list. While a black list allows all users except for those specified by the merchant, a white list will automatically ban everyone. Then, the merchant will have to specifically select which groups should be allowed through the blockade.

For example, if a merchant wants to limit their customer base to only those located in the UK and US, a white list will allow those users, but ban cardholders from all other countries.

Velocity Checks

Criminals want to use stolen information in order to purchase resalable goods. They want to shoot for high-dollar value items, but also avoid generating suspicion in the process.

Instead of using stolen cardholder information to make high-value transactions which may attract attention, a criminal will often make several medium- to large-sized purchases in quick succession. Or, if the criminals have a batch of different card numbers, they may try to “run” as many as possible. This is all done with the intent of maximizing the payoff before the cardholders realize they’ve been robbed.

Rather than just looking at the card number or billing address, transaction velocity limits will examine the buyer’s IP address. Velocity limits can expose fraudsters who attempt to commit criminal fraud, even if they attempt to disguise their activity by using multiple different credit cards.

How Do These Tools Help Prevent Chargebacks?

It’s true that at much as 86% of chargebacks are the result of friendly fraud. At the same time, all of these fraud prevention tools provided by card networks and processors target criminal fraud, rather than friendly fraud.

None of these individual tools should be viewed as a cure-all fraud solution; rather, each is just one part of a dynamic program for multilayer chargeback management.

In order to prevent chargebacks, merchants need an approach that targets all three sources of chargebacks—criminal fraud, friendly fraud and merchant error. Contact Chargebacks911® today to find out how you can capitalize on the world’s first truly dynamic chargeback solutions.

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Mar 6, 2015   875   cb911    Chargeback Prevention    
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