Preventing and Reducing Chargeback Fraud

Fraud is a big headache for business owners, and it may be impacting your cost of doing business more than you realize.

Retailers with chargeback rates of four percent or higher may soon be facing even higher chargeback and merchant account fees, according to an article by the National Retail Federation (NRF). NRF also states that retailers with high rates face a “very real possibility that their bank will place a hold on reserve funds or even terminate their merchant account.”

Even if your chargeback rate is lower than four percent, there’s still a possibility that you’re losing more money than you think. And there are ways to reduce those costs.

Some retailers are turning to a chargeback management firm called Chargeback Gurus, NRF reports. When a retail company signs on with the firm, it begins tracking the client’s chargeback patterns and helps reduce its chargeback fraud.

“Managing chargeback is a complex undertaking, requiring sophisticated technology and knowledgeable people. By keeping meticulous records about things like signatures, contracts, reports and communications, Chargeback Gurus wins average chargeback reversals of 72 percent, sometimes as high as 83 percent,” Chargeback Gurus co-found and CEO Srii Srinivasan tells NRF. “And the average rate of prevention – chargebacks that no longer occur – is 31 percent.”

In the article, Srinivasan explains that when a credit card charge is disputed, the merchant involved “must have strict standardized procedures in place to both prevent chargeback and document fraud and fight it when it does occur.”

In order to begin taking steps to prevent chargeback fraud in your business, read the NRF article for a list of quick tips.