Cyber Shoplifting Costing Retailers Billions, Driving Up Prices
Chargebacks911’s COO Monica Eaton was featured in the Staten Island Advance, discussing the staggering losses retailers are facing due to cyber shoplifting. Cyber shoplifting, otherwise known as friendly fraud or illegitimately filed chargebacks, is a growing concern for ecommerce retailers, amounting to losses of $16 billion a year.
This crime is costing retailers up to $16 billion per year, and it's making online shopping more expensive for consumers, as retailers pass along the costs associated with cyber shoplifting
Eaton explains how the consumer will bear the brunt of these fraudulent actions. Retailers are being forced to increase unit prices to cover their losses.
This fraudulent activity is facilitated by something that was introduced by card networks to protect the consumer, a chargeback. Consumers are abusing the method of filing a chargeback with their bank to gain an instant refund to their account without contacting the merchant.Ultimately, online stores will start to increase their prices to make up for their increasing costs.
Consumers purchase a product online with every intention of not paying for it. When the product arrives, the individual contacts the bank to file a chargeback. Excuses such as, “I don’t recognize the transaction,” or “my purchase never arrived,” are used. Since banks still embrace the mantra of the customer is always right, the refund is awarded.
Not only do merchants lose the value of the transaction and the merchandise itself, they will also be faced with additional fees.
Not only do they lose the transaction value, merchandise, shipping costs, and chargeback fees of $10 to $40 per transaction, but high chargeback rates can jeopardize their ability to process credit cards and lead to substantial fines and penalties.
The article moves on to explain that friendly fraud is growing at a rapid rate of 41% a year. Another alarming statistic is revealed; consumers who successfully file an illegitimate chargeback will do so again within the next 60 days.
These shocking statistics reflect how quickly the issue of cyber shoplifting is growing and how important it is that all online merchants take action to prevent themselves from being a victim of this fraud.
