5 Ways to Reduce Fraud Over the Holidays

Written by Cara Dolberg

With the holidays quickly approaching, we want to give you important information on how to reduce fraudulent charges. As a business owner or manager, this information will help keep your money in your pocket and will reduce the headache of dealing with fraudulent charges down the road.

A chargeback occurs when a transaction is completed but the cardholder claims the transaction did not occur, was unsatisfactory, or was fraudulent. To help you better understand chargebacks and how to reduce your business’s risk, we’ve compiled our top five ways to reduce fraudulent charges.

Five helpful tips to help stop fraudsters and chargebacks:

1. If a transaction seems suspicious or you get that uneasy feeling, don’t be afraid to ask questions. Ask for a photo ID – even if it slows down the checkout line.
2. Require each and every customer to sign the merchant receipt copy and keep in a safe place for 18 months.
3. Ensure incorrect sales receipts are voided and that transactions are processed only once. At the end of the day, take the time to look at the receipts. If you see any mistakes, such as duplicate transactions, fix them immediately.
4. If you process credit card transactions over the phone, be sure to get as much information from the customer as possible including name, address, and the CVV code listed on the back of the card.
5. If you sell products online, make sure your fraud filters are configured to catch any suspicious transactions.

We get questions from our merchants regarding the chargeback process and what to expect so we wanted to take a little time to talk about the process of a chargeback.

Here is what typically happens when a chargeback is initiated by the consumer:

1. The Merchant’s credit card processing provider immediately pulls the amount of the transaction in question into a holding account until further investigation. This is done without the merchant’s knowledge or consent.
2. The Merchant receives a letter in the mail explaining the chargeback.
3. The Merchant must provide necessary documentation to fight chargeback within a specified amount of time.
4. Based on evidence provided, the chargeback/risk specialists determine who is liable for the transaction in question.
5. If it is found that the purchase was indeed legitimate, the money is returned back to the Merchant. Keep in mind the customer can dispute the transaction up to 3 times, depending on certain circumstances, so it is important to keep all paperwork and evidence.
6. If it is found that the purchase was not legitimate, the money is returned to the customer and the Merchant is responsible. The merchant can also dispute the chargeback up to 3 times before it is escalated to arbitration to hopefully be settled outside of court.

We hope you have a wonderful start to the holiday season. If you have a concern or question regarding fraudulent charges or chargebacks, please contact us.