The coronavirus pandemic drove consumers online, but the rise in friendly fraud and criminal transactions has left many businesses struggling with lost revenue. A well-designed chargeback prevention strategy is essential to mitigate these losses.
Fortunately, merchants can protect themselves against loss of revenue by using tools such as chargeback alerts, deflection services, and even chargeback guarantees. Read on to learn how.
Detecting Fraud
A business can lose thousands of dollars monthly to fraudulent transactions or customer disputes. These can result from criminal fraud or friendly fraud. To protect revenue, businesses need a strong defense strategy.
Fighting each chargeback takes time and resources. This can divert resources from growth, acquiring new customers, developing new products and services, or focusing on customer retention efforts. Frequent chargebacks can also damage a business’s reputation as a reliable and trustworthy brand.
Good chargeback prevention services offer fraud prevention tools, screening practices that prevent fraudulent transactions before they occur, and dispute management tools that can help reduce merchant error-related chargebacks. The right solution should also monitor industry trends and adapt to emerging fraud attacks and use cases. In addition, it should be PCI DSS compliant to demonstrate commitment to data security. These measures will reduce the risk of data breaches and non-compliance penalties, which can trigger chargebacks. It should also integrate with a payment gateway to automate processes and offer flexible pricing structures based on a merchant’s unique needs and risk thresholds.
Managing Disputes
Disputed chargebacks result in financial losses and tarnished reputations for merchants. Fortunately, there are a few ways to prevent them from happening. The first is to provide clear, transparent communication about product/service descriptions, terms, conditions, and return/refund policies on your website. This will help reduce customer confusion and frustration, often the root cause of friendly fraud chargebacks.
A second strategy is using chargeback prevention tools like alerts and deflection services, which intercept disputed transactions before they reach the card issuer. These tools have been proven to significantly reduce chargeback rates by identifying and stopping fraudulent transactions before they happen.
Some chargeback prevention services can even fight disputes on your behalf to recoup revenue lost to them. This will help keep your profits intact while maintaining customer loyalty and a positive business image. However, the cost of these tools varies among providers, so research your options carefully before choosing one.
Resolving Disputes
Despite the many fraud prevention tools and screening practices merchants can use, some chargebacks are inevitable. Effective long-range chargeback defense requires a balanced strategy that includes anti-fraud tools and screening to combat actual first party fraud, along with processes for handling customer inquiries that can quickly escalate into disputes or even disputed charges.
Many chargeback protection services offer dispute-resolution tools. This can include automated processes to inspect transactions and a guarantee covering the cost of any disputed chargeback fees if a business wins a dispute.
To minimize the risk of customer disputes leading to disputed charges, merchants should ensure their customer service processes are well-documented and provide clear instructions on filing a complaint. They should also ensure their printed receipts and delivery dockets clearly show the billing descriptor of each transaction. This can prevent a simple misunderstanding from escalating into a costly dispute. These tactics can help reduce the number of disputed charges but won’t stop them entirely.
Keeping Customers
Chargebacks can be costly and can cause your business to lose customers. In addition, a high volume of disputes can lead to relegation to a lower processing program and even outright account suspension. However, a well-implemented dispute management system can reduce the overall impact of these hidden costs.
Clerical errors or unsatisfied customers initiate many disputes. Your customer service team’s quick and helpful response can reverse the argument. Ensure your contact information is displayed on all ordering documents, including order blanks and receipts. Provide a phone number with short wait times and make customer service representatives available around the clock.
It’s impossible to eradicate all chargebacks, but you can limit the damage and improve your chances of winning disputes with an effective fightback strategy. By working with a high-risk payment processor, keeping records, and honoring dispute claims when necessary, you can protect your business from the financial impact of these hidden costs.
