3rd January, 2022
Every transaction counts. It contributes to the recovery and bolsters business.
But there tends to be a setback when a chargeback process is initiated. No airline or travel merchant would like to lose out on business owing to chargeback fraud.
Travel merchants acknowledge that the issue of friendly fraud needs to be handled better in 2022.
Shoppers have a tendency to abuse the chargeback process and with more shoppers being aware of their rights as consumers, it is vital to understand the chargeback cycle and fight against illegitimate payment disputes, either filed by mistake or by dishonest cardholders who know how to abuse the system. Not all chargebacks are fraudulent, but then differentiating them from illegitimate ones is imperative.
Serious issue
Insights from Sift’s global data network indicated that average daily chargeback cases (in terms of disputes filed) rose by 19% between the first quarter of last year and that of 2020.
The report stated: Consumers claim a variety of reasons for filing disputes, with well over one-third (42%) stemming from true fraud (e.g., unauthorized purchases using the customer’s payment information). But when asked separately, 17% of consumers who have filed chargebacks admitted to “friendly fraud,” wherein they filed a true fraud dispute for a transaction that wasn’t actually fraudulent—making the legitimate cardholder and the fraudster one in the same.
Merchants must look into aspects that tend to weaken their stance. Find ways to keep chargeback rates low. These include:
Avoid common mistakes – According to Chargebacks911’s Monica Eaton-Cardone, there are four common ways in which one can unintentionally complicate the process.
- Bad communication: There is a need to maintain trust with your customers by making yourself available at every stage along the buyer’s journey, and also maintain details such as transaction data, fulfillment data, customer profiles and verification data, recommends Monica.
- Lack of understanding: Be informed about the representment package, what all is needed etc. Be aware that each card provider has their own set of codes and resolution processes. It’s your responsibility to keep track of them all, according to Monica.
- Lack of planning: Be ready for each reason code. Plan adaptable, step-by-step plan to appropriately respond to chargebacks and ensure the team understands the process.
- Simply ignoring chargebacks: Rather than ignoring, take valid chargebacks as a learning opportunity, stated Monica. “Opting not to fight when you should will only cause more headaches in the long-term,” she said.
Automation – Rich Thompson, Global Airlines Strategist, Riskified underlined the significance of automation, and how automated decisions can match airlines’ rapid changes in volume. With offerings like chargeback guarantee, airlines can enhance the online customer experience by declining fewer consumers.The objective is to enable a travel merchant to decline “fewer consumers out of a fear of fraud”.
Real-time assistance – Companies like Nethone are offering alerts on challenged transactions by the users. A merchant pays only for the chargeback alert that has been used.
Evaluating suspicious behaviour – Fraudsters may take the opportunity to create fake accounts or use stolen accounts via account takeover (ATO). There are merchants who only they realize their database or customer accounts’ have been stolen when they suddenly start to see increased chargebacks and increased customer transaction disputes. By the time the relevant team identified a chargeback relating to an account takeover, the damage has already been done across multiple other accounts. As discussed during Ai Events’, an astute multi-layered fraud management has to be in place, but not at the expense of CX.
The e-commerce fraud landscape has evolved considerably since the onset of the pandemic in early 2020. It is imperative for merchants to be pro-active and being in control as early as possible since fraudulent activities, including chargebacks from friendly fraud, aren’t going to vanish completely.
By Ritesh Gupta
Ai Team
