Chargebacks911 Shares Chargeback Prevention Strategies to Thwart the Continued Growth of Cybershoplifting

With evidence pointing to an increase in friendly fraud—or “cybershoplifting”—risk management firm Chargebacks911 urges merchants and banks to take decisive action against unwarranted credit card chargebacks.

(Tampa Bay, FL) July 28, 2014 – Recent news stories reveal that friendly fraud—a form of “cybershoplifting” in which consumers initiate unjustified chargebacks—is growing at 41% per year (1), with 2012 losses totaling $11.8 billion and up to 86% of chargebacks believed to be fraudulent (2). Chargebacks911 (http://chargebacks911.com/), a leading dispute mitigation and risk management firm, examines the factors contributing to rising credit card chargebacks and outlines the steps required to reverse this troubling trend.

According to Monica Eaton-Cardone, co-founder and Chief Operating Officer of Chargebacks911, banks aim to keep their cardholders happy and typically assume “the customer is always correct” … which often leads to automatic chargeback refunds without further investigation or analysis. She notes that ‘zero liability’ policies also encourage consumers to run up charges without forethought, confident in their ability to dispute a charge and obtain a refund if they change their mind. Online merchants end up shouldering the financial burden; 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.

While some consumers are unaware of the full costs and ramifications of their chargebacks, others intentionally engage in friendly fraud. One study found that among cardholders who deliberately file unwarranted chargebacks, more than 20% said that it was “OK” or that it “didn’t bother them very much” (2). In fact, Chargebacks911 has found that cardholders who obtain a fraudulent chargeback and get away with it are likely to become repeat offenders, with 50% filing another chargeback within 60 days (1)—thereby perpetuating the cycle of friendly fraud.

Eaton-Cardone warns that cybershoplifting will continue to increase unless banks and merchants take an active role in identifying and preventing it. “Card issuers have been relying on automated algorithmic coding initiatives developed decades ago, but those methods of fraud detection have become outdated as technology and consumer behavior have evolved,” she explained, pointing out that yesterday’s solutions have no hope of addressing today’s challenges. “Banks need to redesign their systems and processes with future prediction and growth trends in mind, and they need to add more human intelligence to their fraud-prevention arsenal.”

Similarly, Eaton-Cardone maintains that a merchant’s best defense against friendly fraud involves both automated and human elements. Below, she outlines the three-pronged approach that should be at the core of all chargebacks solutions:

– Intelligent Source Detection™: A 106-point inspection should be conducted to accurately identify chargeback triggers and help prevent them.

– Fully Customized Disputes: One-size-fits-all chargeback disputes are often unsuccessful, so chargeback specialists need to be highly trained and use an eight-step process to customize each response before transmitting it to the bank.

– Dynamic Loss Prevention: To keep pace with evolving technology, chargeback mitigation should reject standard static techniques in favor of dynamic, adaptive solutions that account for a constantly changing e-commerce landscape.

“By proactively preventing chargebacks, merchants and ecommerce can achieve greater business longevity—and ultimately win the war against friendly fraud,” said Eaton-Cardone.

Chargebacks911’s comprehensive dispute mitigation and risk management solution incorporates proprietary technologies and proven strategies not duplicated in the industry. For more information on Chargebacks911 and its chargeback management solutions, visit https://chargebacks911.com/preventing-chargebacks-ebook/.

About Global Risk Technologies and Chargebacks911:

Global Risk Technologies is most known for its role in payment processing solutions that cater to each side of the value chain: Chargebacks911.com and eConsumerservices.com. The firm is headquartered in Tampa Bay, Florida, with offices in Ireland and Atlanta. They have approximately 350 employees worldwide and currently manage over 200MM transactions worldwide each month.

Chargebacks911 is a division of Global Risk Technologies, and was developed specifically for merchants to offer immediate aid through proprietary technology and provide the necessary function that gives merchants the freedom to focus on their core competency and optimize their in-house skill set. Chargebacks911 focuses on chargeback mitigation and risk management. They specialize in servicing Internet merchants and acquiring banks, offering dispute response solutions and deep analytics. Chargebacks911 works with their client base to help them keep dispute rates down and retain their ability to accept credit cards. For more information, visit www.chargebacks911.com.

1. Orem, Tina. “Fraud May Stem From Cardholders”; Credit Union Times; June 18, 2015. cutimes.com/2015/06/18/fraud-may-stem-from-cardholders

1. Rampton, John. “Why ‘Friendly Fraud’ May Become an E-Commerce Nightmare”; Inc.; January 22, 2015. inc.com/john-rampton/why-friendly-fraud-may-become-an-e-commerce-nightmare.html