Chargebacks costs continue to soar as no-card transactions rise
The true cost of chargebacks is 140 percent higher than the initial fraud cost, due to fees and merchandise replacement, according to new figures.
Leading chargeback expert, Monica Eaton-Cardone, Co-Founder of Global Risk Technologies, Europe’s first chargeback remediation specialist, and Chargebacks911 its US subsidiary, has warned that LexisNexis’ latest research showing the growth of CNP transactions leading to more chargeback fraud is only the start, as the growth of mCommerce and eCommerce drives retailers’ vulnerability to fraud.
LexisNexis’ True Cost of Fraud Study 2016 revealed that chargebacks are costing retailers US $2.40 in chargebacks for every dollar fraudulently lost – 140% higher than the initial loss.
Eaton-Cardone comments: “Fraudsters are constantly probing for weaknesses to exploit in merchants’ systems and this latest research shows that the battleground is now firmly entrenched in card-not-present (CNP) transactions. Merchants are not just falling victim to fraud, but they are suffering more from the associated costs of fraud, namely chargebacks, fees and replacing lost goods.
Overall, chargebacks account for 42 percent of total fraud losses suffered by large and small companies, including a 9 percent year-on-year rise for the online channel and 12 percent for the mobile channel, according to LexisNexis.
Eaton-Cardone states that the rising tide of chargeback fraud must be confronted effectively: “We have to ensure that we do not just throw money at the problem, but enable merchants to take effective actions to safeguard genuine sales and margins. Chargebacks need not be an epidemic, eroding the bottom-line from hard won profits.”
“Constantly re-evaluating the best solutions as part of a multi-layered approach using both manual and software approaches, will help give each merchant the upper hand in the fight against increasingly sophisticated fraudsters.”
Global Risk Technologies is advising simple steps that merchants can take now to have an immediate impact on chargebacks:
- Concentrate on high levels of customer service and maintain impeccable records, so retailers can disprove fraudulent claims of non-delivery.
- Make sure logistics chains ensure speedy delivery of goods
- Be proactive in looking for potentially fraudulent transactions such as large orders and new delivery addresses.
To find out more about reducing the chargeback risk, contact [email protected]
Global Risk Technologies provides a comprehensive and highly scalable enterprise solution for chargeback compliance, risk mitigation, fraud management and merchant sustainability services to European acquirers, card issuers and local merchants.
The Global Risk Technologies solution is designed to meet the appetite in Europe for effective, sustainable chargeback remediation, providing highly scalable and sustainable technology for outsourced post-chargeback processing, risk mitigation and merchant education. It helps decrease the negative impacts of chargebacks, thereby increasing processing retention and revenues, and helping combat cyber-shoplifting, resulting in sustainable, secure growth.
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