E-commerce fraud is an inescapable reality; it is a problem that affects businesses ranging from individual entrepreneurs to large corporations.
Chargebacks: What are they, and how can they affect my business operation on the Internet?
A chargeback occurs when a customer receives an unauthorized charge on their credit card and requests a refund from the bank or financial institution. In response, the financial institution contacts the online store that processed the transaction to request a refund.
This refund request is known as a chargeback or dispute, where it represents an additional cost for digital merchants.
Put another way, chargebacks are refunds that merchants have to issue when they process unauthorized payments that are fraudulent.
It's important to note that chargebacks are dangerous to online store owners for several reasons. By knowing more about the order, you can avoid accepting a fraudulent purchase and thus protect yourself from generating a chargeback.
What are the consequences of receiving chargebacks?
The merchant (owner of the online store) has to issue a full refund to the financial institution of the credit/debit card owner that operated the fraudulent charge. Typically, this notification arrives days after the product has been shipped.
Lost Merchandise and
Fraudulent orders are often shipped to their destination before the online store owner is notified of the chargeback dispute. Costs generated during the commercial operation and merchandise invested many times are lost.
If a business experiences a high percentage of chargebacks in relation to overall transactions (more than 1%, as a general rule), the merchant account provider can freeze (or even cancel) the merchant’s bank account or credit card.
Why do chargebacks happen in online stores?
It is estimated that 3% of all eCommerce transactions are fraudulent. This means that chargebacks are one of the most common hurdles digital merchants have to overcome.
Online stores that do not employ fraud detection and protection mechanisms, such as Critical.net, are even more vulnerable to these attacks. When scammers find a page that is not well protected, they usually attack constantly until they are detected.
This means that if your store is not protected, you must take action against fraudsters who can target your page as soon as possible.
How to prevent chargebacks?
If you're looking into how to resolve a chargeback, Critical.net is your solution.
Critical.net is designed and built to facilitate the fight against fraud for all businesses that have a presence on eCommerce platforms. We help you identify real users from fake ones; this is how we identify fraudulent orders. As much as scammers try to hide their identity, with Critical.net, you can stay one step ahead of scammers.
Chargebacks can impede your store's growth and result in unreasonably high costs. We are here to protect you.
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