Use Available Prevention Tools

Fraud is dynamic. It evolves constantly as technologies change, so risk mitigation strategies must be equally adaptive.

Several prevention methods have been proven to help detect fraud and validate cardholders. You should take advantage of these readily available prevention tools.

Card network tools such as Address Verification Service (AVS), card security codes (CVV), 32D Secure 2.0 (3DS2), and Visa Account Updater (VAU) are all methods of validating a shopper’s identity. Using two (or all of them) together can increase accuracy.

There are other chargeback prevention tools available as well. Chargeback alerts, for example, provide advance notice of disputed transactions. Automated response programs provided through the card networks, like Order Insight (for Visa) and Consumer Clarity (for Mastercard) work in real time to resolve inquiries. These tools help clear up cardholder confusion and prevent cases of chargeback fraud.

Improve Customer Service

Outstanding service is the best defense against friendly fraud. To help prevent chargebacks in this area, customer service reps must be helpful, responsive, and available to customers before, during, and after the sale.

You should ensure that dealing with your customer service department is significantly easier than calling the bank. Contact phone numbers, email addresses, even social media accounts should be prominently displayed on website pages, order blanks, receipts, packaging, and more.

Today’s customers expect swift, helpful responses to inquiries. Live representatives should answer the phones, preferably in three rings or less. Emails and social media contacts should be acknowledged within an hour at most. And if shoppers can order 24/7, you should consider making round-the-clock customer service equally accessible.

Better Order Communication

No matter what complications arise while fulfilling an order, customers must be kept apprised of the situation. Consumers realize that problems come up unexpectedly, and most will be understanding if they’re notified right away. Without an explanation, however, it’s easy for shoppers to assume the worst, get angry, and call their bank.

From checkout through order delivery, the more contact you have with customers, the more confident those customers will feel. This includes communicating at every important stage of the fulfillment process.

Order confirmations should include proposed shipping and arrival dates. You can email tracking numbers when the order is en route, and provide delivery confirmation for high-value items. Updates at key points in the shipping process helps keep delivery expectations realistic.

Eliminate Merchant Error

You may be surprised to discover the number of chargebacks that result from minor lapses and procedural missteps. Errors may include submitting incorrect information or not requesting authorization. More dangerous are triggers hidden in normal processes, which can potentially cause multiple disputes on a daily basis.

Fortunately, you can prevent chargebacks resulting from merchant error in just about every case. You should evaluate all aspects of your operations to identify and remedy potential chargeback triggers. You must monitor day-to-day practices to ensure adherence to best practices at every level.

This also applies to fulfillment, shipping, and return policies. Frustrating or hard-to-understand policies encourage unhappy customers to file chargebacks. Clear, concise, and flexible policies tell shoppers that they can resolve issues with a simple email or phone call to customer service.

Provide Authentic Marketing

To prevent “item not as described” chargebacks, all service and product descriptions must be as factual as possible. You should use detailed descriptions in place of vague marketing slogans that could misrepresent the product. Focused pictures from multiple angles, along with clear specifications such as size, color, and brand, help ensure customers aren’t surprised when their order is delivered.

Inflated descriptions can lead shoppers to feel deceived when they receive the actual product. The cardholder might suspect that you’re untrustworthy and dispute the transaction with the issuer. Even worse, that customer may now be lost for good, preventing future sales.

It’s up to you to provide the most accurate details, images, and specifications for all products and services to prevent chargebacks.

Manage Recurring Payments

A recurring payment (subscription) business model offers benefits for both merchants and customers. However, unique chargeback risks come along with those advantages.

Consumer expectations change when they move from being one-time purchasers to long-term subscribers. You must be prepared to respond quickly to inquiries, and be proactive with initiating communications.

Recurring billing also demands operational transparency. Terms of service should be clear, concise, and readily available, even before the initial transaction. This includes automated billing procedures, contract lengths, and additional costs (such as early termination fees).

Above all, customer cancellations should be as simple and pain-free as possible. If subscribers feel they were deceptively locked-in to a service they no longer want, they will bypass your policies by filing a chargeback.

Combat Friendly Fraud

As we mentioned earlier, friendly fraud is hard to prevent because it is hard to predict.

Most of the above suggestions may help curtail some friendly fraud chargebacks. However, there are other, more specific steps you can take. Signed delivery confirmation, for example, may stop customers from falsely claiming the purchased items never arrived. Unsigned confirmation on its own is not enough to win a reversal, but even that can be effective when combined with additional evidence.

Friendly fraud disputes can be initiated unintentionally by something as simple as a customer inquiry. An issuer may file a chargeback when the cardholder only meant to ask a question about a charge. You can avoid this scenario by making sure the billing descriptors appearing on your customers’ payment card statements clearly indicate where the transaction was made.

Perhaps the best step you can take to prevent chargebacks resulting from friendly fraud is to challenge invalid disputes. Banks may take your refusal to fight illegitimate disputes as an admission of guilt. When merchants fight back against friendly fraud, it sends a message to both banks and cardholders, thus building a better reputation, stronger relationships, and discouraging future friendly fraud.

Seek Professional Assistance

Implementing these do-it-yourself prevention steps will prevent a few chargebacks. They address the “low hanging fruit;” the easily preventable chargebacks caused by obvious mistakes and mismanagement.

Most types of chargebacks, however, can only be countered with intensive management efforts that surpass DIY tactics. There is also the matter of having access to the proper tools. This is where professional assistance from a chargeback prevention service really makes a difference.

Intelligent Source Detection™ technology from Chargeback911®, for instance, is the only system on the market designed exclusively to look beyond reason codes to pinpoint the source of each individual chargeback.

Preventing chargebacks means retaining more revenue, but for many merchants, it’s also the key to sustaining the business’s longevity.