News from the WireTampa Bay, Fla., May 26, 2014 – Credit card chargebacks have become a growing concern for many online merchants; research has revealed that 86% of chargebacks may be fraudulent – in cases where cardholders fail to contact the merchant before turning to their banks for resolution – , and Visa has estimated that chargeback fraud—also known as “friendly fraud”—is growing by about 41% each year. (1) Chargebacks911 (chargebacks911.com/), a leading dispute mitigation and risk management firm, has found that the majority of fraudulent chargebacks are typically associated with five specific chargeback reason codes. (2) Because of this, the company maintains that banks should perform due diligence and investigate claims filed under these codes rather than automatically penalizing online retailers with chargebacks and fees.
According to Monica Eaton-Cardone, co-founder and Chief Operating Officer of Chargebacks911, the five chargeback reasons most commonly associated with friendly fraud—and their corresponding Visa (V) and MasterCard (MC) codes—are:
Eaton-Cardone notes that consumers often cite these reasons when they experience buyer’s remorse after making a purchase, particularly if they didn’t want to perform or didn’t qualify for a refund/exchange in accordance with the merchant’s policy. For example, they might have worn apparel or shoes and therefore were not eligible to return the items, or they might have broken an appliance due to improper use and subsequently claimed it was defective. With recurring transactions, subscriptions or installment billing, the customer might never have contacted the merchant to cancel the service, or they may have canceled a credit card to avoid paying for their purchases. Alternately, consumers may have forgotten making a purchase or they may be unaware of a purchase made by a spouse, child or someone else with access to their credit card.
“In most cases, the credit card issuer accepts the consumer’s claim at face value and automatically files a chargeback without further investigation,” explained Eaton-Cardone. “When this happens, merchants that do not contest and win the dispute are financially penalized in several ways. Not only do they lose the sale, the merchandise and any shipping costs, but they also get hit with a chargeback fee that is usually between $10 and $40 each — so their losses are compounded. It’s evident that the current system is imbalanced; merchants are shouldering too much of the burden when banks could be doing more to reduce the effects of friendly fraud.”
Visa previously responded to merchants’ concerns by implementing several changes in relation to chargeback reason code 83 (fraud, card not present). It expanded the scope of what is considered “compelling evidence” for merchants to dispute a chargeback, and it requires that credit card issuers contact the cardholder when a merchant provides compelling evidence against a chargeback. (3)
While Eaton-Cardone applauds Visa’s initiative as a step in the right direction, she contends that more can be done to support merchants in fighting chargeback fraud. “At a minimum, I’d like to see Visa apply these standards to all of the reason codes associated with friendly fraud, and I’d like to see MasterCard and other credit card issuers follow suit,” she stated. “If banks worked with merchants instead of against them and took a more proactive role in investigating chargeback claims, it would discourage consumers from filing unwarranted credit card disputes and could potentially reverse today’s rising levels of friendly fraud.”
Until substantive changes are made to the current chargeback system and processes, Chargebacks911 will continue to help merchants fight unjust chargebacks and recover profits with their proprietary Intelligent Source Detection technology. The company’s comprehensive service suit includes chargeback alerts, dynamic loss prevention, intelligent source detection, affiliate fraud detection, chargeback resolution and response, and merchant education.
For more information on Chargebacks911 and its loss prevention solutions, visit chargebacks911.com .
About Global Risk Technologies and Chargebacks911:
Global Risk Technologies is most known for its role in payment processing solutions that cater to each side of the value chain: Chargebacks911.com and eConsumerservices.com. The firm is headquartered in Tampa Bay, Florida, with offices in Ireland and Atlanta. They have approximately 350 employees worldwide and currently manage over 150MM transactions worldwide each month.
Chargebacks911 is a division of Global Risk Technologies, and was developed specifically for merchants to offer immediate aid through proprietary technology and provide the necessary function that gives merchants the freedom to focus on their core competency and optimize their in-house skill set. Chargebacks911 focuses on chargeback mitigation and risk management. They specialize in servicing Internet merchants and acquiring banks, offering dispute response solutions and deep analytics. Chargebacks911 works with their client base to help them keep dispute rates down and retain their ability to accept credit cards. For more information, visit www.chargebacks911.com .
1. The Green Sheet. “Researchers Find 86 Percent Fraud in Chargebacks”; updated April 15, 2015. greensheet.com/breakingnews.php?flag=breaking_news&id=1533 .
2. Chargebacks911. “Chargeback Reason Codes Associated With Friendly Fraud”; Chargeback Reason Codes; March 11, 2015, 2015. chargebacks911.com/knowledge-base/mastercard-and-visa-chargeback-reason-codes/ .
3. Katz, Matthew. “How to Use Visa Codes to Avoid Chargebacks; PaymentsSource; August 19, 2014. paymentssource.com/news/paythink/how-to-use-visa-codes-to-avoid-chargebacks-3018894-1.html .
The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information: bankcardlife.com?orid=33533&opid=1 .
Source: Company press release. 
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