Profits are the lifeblood of a business but incurring a series of deceptive chargebacks can quickly drain that blood. As a merchant, you want to believe the best of your customers so you may mistakenly think that your company is fool-proof when it comes to cyber crime.
It’s been estimated that e-commerce fraud costs online merchants upwards of $3 billion dollars a year, and many of these deceptive practices take the form of dishonest chargebacks. This is a rising trend where buyers stiff retailers by claiming the product they ordered was never delivered, claiming the merchandise was returned but the merchant never refunded the money or claiming the product was damaged.
In one chargeback case, a thief purchased an expensive piece of jewelry from an online merchant. He then claimed the wrong item was shipped and returned a cheap watch in the box he shipped back. The merchant caught on and asked the authorities to launch an investigation. After some police inquiries, the scammer returned the jewelry.
This may seem like a drastic measure to take, but small business owners must be vigilant when it comes to battling cyber crime, especially in tough economic times when normally honest customers may resort to petty cyber shoplifting to save money.
To reduce the headache of chronic chargebacks, also known as chargeback abuse, there are several steps you can take. Using an IP verification tool, you can determine the location of the buyer’s IP address and cross reference the billing and shipping addresses to see if they match. If there are any discrepancies, you can contact the prospective customer directly to verify their order and payment information before proceeding. You can also require a signature upon delivery of your products so thieves cannot claim that they never received the merchandise.
Fraud may seem unavoidable, but putting the necessary anti-theft devices in place can protect your business.