Tis the Season – for Chargebacks

The holiday shopping season is in full swing. That means the credit card fraudsters are out in force as well. The fraudsters are doing their holiday shopping just like you. The only difference is, they have no intention of paying for their gifts. Because they don’t plan to pay for their purchases, they are buying high-end, top-of-the-line expensive goods. They’ll look like a hero for Christmas while leaving you feeling like a zero.

How They Do It

Knowing how thieves operate can help you avoid sustaining a loss. Online sales account for the highest fraud losses. This is because the fraudster is invisible, and you are working in a Card-Not-Present (CNP) environment. You have no way to verify the identity of the person placing the order and you don’t even know if they have the credit card in their hand while making the purchase. In Card-Present environments where credit cards are accepted in person, fraud can still occur. Credit cards can be cloned. Mailed credit cards can be intercepted in the mail. Fraudsters can apply for credit in someone else’s name.

Online Sales Protection

If you engage in online sales, there are some steps you can take to prevent a chargeback. Thieves will often perform a “test transaction” using a stolen card or card number. They might purchase something small to see if the transaction goes through. If it does, subsequent transactions will likely be made until the card no longer works. Watch out for multiple transactions to the same person and address and scrutinize these orders. Make sure online sales require the billing address of the credit card and use the Address Verification System (AVS) to match the card to the billing address. Refuse shipment of any mismatches.

Proof of Fulfillment

One of the requirements of merchants responding to a chargeback is to prove the product was delivered. A signature of receipt can be helpful but will not always deliver the win during the rebuttal process. If the signature is that of a fraudster and doesn’t match the signature of the cardholder, the merchant loses. Requesting a signature be obtained from a delivery driver can be an inconvenience to customers because they must be present to accept the delivery. Weigh out the cost of such an inconvenience to your potential loss.

In-Store Protection

Transactions completed inside of a brick-and-mortar location are less likely to result in a chargeback. Security cameras prominently located in the check-out area are highly effective at discouraging thieves from conducting fraudulent transactions. If you can’t afford cameras, Amazon offers a pack of (4) fake security cameras for less than $20. Examine credit cards closely for authenticity. Every credit card brand uses a unique three-dimensional hologram on the front or back of their cards. Visa uses a dove hologram, MasterCard – a world map, Discover – a globe. Some Amex cards have a hologram of the American Express image embedded into the magnetic stripe. On others there is phosphor image located in the Centurion portrait and words “AMEX” are visible under UV light. Always verify credit cards against a government issued ID. Make sure the credit card name and the ID match.

Avoiding a fraudulent chargeback begins BEFORE THE SALE. Take the necessary time to verify the identity of the customer. If you experience a chargeback, make sure you respond to it in a timely manner. Failure to respond is a negative mark against a merchant and if you have too many unanswered chargebacks, you can be banished from accepting credit cards in the future.

Aurora Payments can help you fight a chargeback. If you need help, call us at 833-AURORA2 (833-287-6722) or send an email to: Hello@aurorapayments.com. You don’t have to handle this alone.

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