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Education

Help merchants stem the fighting chargebacks is crystal clear.
Merchants must intimately under-
rising tide of chargebacks stand what they are up against, and
how to deal with them properly.

By Suresh Dakshina With 'friends' like these, who
needs fraudsters?
Chargeback Gurus
Everyone's favorite misnomer and
ithout significant policy upheaval, chargebacks are here to stay. least favorite form of chargeback-re-
If you or your merchants adopt a strategy of writing chargebacks lated fraud, so-called friendly fraud,
off as a cost of doing business and hoping external forces will doubled in the last four years, and
W somehow stem the tide, you may find yourselves submerged our data suggests this statistic is still
in a flood of [friendly] fraudulent chargebacks carrying away your rightfully on an upward trend. Friendly fraud
earned revenue. Chargeback rates are rising by as much as 20 percent per year may take its name from the fact it
in certain industries. Furthermore, the average chargeback costs merchants up can be perpetrated unwittingly, by
to twice the original disputed transaction amount. According to a recent study customers who don't fully compre-
(Javelin Strategy & Research, 2018), chargeback rates are at their highest point hend the fact that they're engaging
ever, and the trends in ecommerce and payments fostering this growth show in an unlawful practice, but as we all
no signs of reversing anytime soon. know, fraudsters deliberately employ
friendly fraud as a smoke screen with
At the same time, consumers are becoming exceedingly comfortable with the which to cheat merchants.
highly accessible chargeback process, increasing the likelihood that they'll turn
to it as a first response to an unsatisfactory experience. Worst of all, fraudsters Overall, chargebacks served their
are aware of how elegantly simple it is to abuse the process and defraud mer- purpose for a season and helped to
chants lacking an effective system of chargeback defense. Given these facts, the increase ecommerce consumer confi-
importance of having a comprehensive, up-to-date strategy for preventing and dence. In fact, our ecommerce econ-
omy would not be where it is today
without consumer protections in
place to combat the early '90s fraud
epidemic. We can take some comfort
in the knowledge that chargeback
safety nets probably saved us from
the very creative rise of the "Prince of
Nigeria." The process has outgrown
that function, though. Does it protect
consumers? In some cases, yes, but
we know now it is being overwhelm-
ingly abused as a form of fraud. For
everyone from digital cartels to video
game loving kids, chargebacks have
become a tap to siphon funds from
merchants on a global scale.
What can we do now?

Educate. We need to teach our cus-
tomers in a way that helps to shape
the public opinion. Take Google's ap-
proach for example. Rather than sim-
ply fight the chargebacks, we need to
proactively teach our customers the
law is being broken. Here's a quote
from Google's support team that ex-
emplifies how that company is ad-
dressing chargebacks with a similar
approach:

"Your Google payments profile
was temporarily suspended be-
cause you reported to your card is-
suer that at least one of the charges
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