Block The Bloodsuckers: Crush Chargeback Fraud

Every single business that accepts credit cards should have a plan in place for stopping those who would use chargeback fraud to try to steal money. A lack of a plan means that fraudulent chargebacks will become expensive to the point at which a payment processor may actually close a merchant account. Chargeback protection is not as easy as just planning to reduce chargebacks, but this is the first step on the road to preventing chargebacks from affecting your business.
Cardholders can issue a legitimate chargeback for a multitude of reasons. An overly long delivery time, or customer dissatisfaction due to misleading marketing claims, can cause this to happen. Of course, if they have been sent your products or received your services already, this can mean your business takes a sizeable hit. Knowing how to avoid chargebacks can reduce this unnecessary drain on resources.
A fraudulent chargeback is issued by someone who is trying to ‘game’ the system by ordering a product or service as part of a chargeback scam. If they succeed, they end up with both the items as well as the money they retrieved with their chargebacks. Fraud like this is clearly illegal and chargeback statistics show that the crime is on the rise. Avoiding chargebacks, as well as how to fight chargebacks, are hot topics for the huge proportion of business owners who deal with credit card transactions.
Building a plan for fighting chargebacks will help any business avoid chargebacks and therefore reduce risk and increase profitability. It also means that the business is already equipped with an idea for how to fight a chargeback which has been made fraudulently.
The best chargeback solutions include a check to verify the legitimacy of the card being used. The best way to do this is to use a database like to check that the Bank Identification Number, country of issue, type of card and other details line up. This first line of defense is highly effective at deterring opportunist criminals and has the power to prevent chargebacks. Further to this, the standard technologies of CVV2 and CVC2, as well as Address Verification Systems are a crucial part of the inventory at your disposal which will help you avoid chargeback fraud.
As stated earlier, a merchant chargeback protection plan includes two things – a plan to stop chargebacks before they happen as well as a way to fight them when fraudulent merchant chargebacks slip through the net. The latter of these can most effectively be taken care of through accurate and complete record-keeping. Collection and archival of signatures (if applicable), sales receipts and proofs of delivery is imperative. When a fraudster tries to make an invalid claim, he will lack any proof to back up his claims. Your business, however, will be able to demonstrate exactly what happened and when; this meticulous book-keeping can save a business a very large amount of money in the long run.
While business owners have been highlighting the problems inherent in chargebacks for a long time, there seems to be very little hope for a change in the status quo. The defenses a business erects to protect itself are the only barrier between it and the myriad criminals looking to suck the life-blood out of it.