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satisfaction. They can serve as a deterrent to merchants who might
be tempted to sell sub-par products or services, and so help ensure the merchants stay honest. Unfortunately, criminal fraud flourishes
in today’s society. Filing chargebacks on fraudulent card transactions can help innocent victims recoup their money.
When can consumers legally use chargebacks? Whilst knowing the chargeback definition is important, it is more beneficial to understand when consumers should use chargebacks. Where identity theft and unauthorised
transactions have been made, the victim should contact the bank immediately. However, even if fraud has occurred – or
the consumer thinks it has – it is in the consumer’s best interest to communicate directly with the merchant. Sometimes, the perceived fraud might
actually be an accident. Maybe the consumer has forgotten about the purchase, or the merchant made an innocent mistake. So what can you do to ensure your credit
card charges are valid? From both ends of the equation, consumers and merchants should take responsibility for their security and use the tools available to them: l Use the Address Verification Service. l Use security codes. l Use 3D secure. l Use fraud alerts. In the commercial world, as many as 40%
of all chargebacks are caused by merchant errors and are, therefore, totally preventable. If you get a query, then ensure your team members are aware that they should:
Internet and e-commerce fraud losses on UK-issued cards 2007-2016
One of the key driving forces behind chargebacks is customer satisfaction. They can serve as a deterrent to merchants who might be tempted to sell sub-par products or services, and so help ensure the merchants stay honest
Merchants should, therefore:
lMaintain PCI-DSS compliance. l Use security measures – tokenisation, encryption. l Use delivery confirmation for big-ticket items. l Check their billing descriptions. lMonitor suspicious activity. lMonitor the sale of digital goods. If you accept credit cards, it is likely that
you will have received a chargeback. What you will need to find out, is which category it will fall into and why it happened.
Chargeback categories l Genuine query. l Fraudulent (criminal or friendly). l Paperwork can be lost or ignored. l Customer not present. l Data protection or GDPR breaches. l Expert assistance utilised.
l Answer requests in a timely manner. l Grant credits and cancellations when due. l Not accept an expired card.
Buyer beware –market products and services honestly Be descriptive and use images and videos wisely. Choose your words carefully and be on the lookout for potential fraud. Validate fraud, and by that I mean to
monitor repeat customers, create a blacklist, a whitelist, and a set of velocity limits, so that trends can be seen. By using chargeback-alert networks, you
can be forewarned of certain card numbers that are being used fraudulently. For consumers, a credit-card chargeback
is particularly useful where the cost of the goods or services was under £100 and Section 75 does not apply. For all credit- card transactions over £100, you also have rights under Section 75 of the Consumer Credit Act. Legal requirements are in place to protect
the cardholder’s data. However, we all know how easy it is to follow consumers through their social-media pages and for fraudsters to clone or steal card details.
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Conclusion The amount of 3D Secure online fraud against UK retailers totalled approximately £155.5m in 2015 – up 13% on 2014. There was also a substantial rise in fraud
against online retailers based abroad, rising 27% to £103m. Initiatives such as chip and PIN have
made it harder to commit frauds using a card without having the PIN. Fraudsters are instead focused on frauds
that enable them to steal both people’s cards and PINs. These range from distracting people in shops or at cash machines and then stealing their cards without them noticing (distraction thefts), to simply tricking them into handing over their cards and PINs on their own doorstep. If you are suffering lost revenue due to
chargebacks, then ask an expert: l Financial Fraud Action UK. l The Dedicated Card and Crime Unit. l The National Fraud Intelligence Bureau. CCR
Five tips to avoid chargebacks l Be easy to contact. l Provide delivery tracking. l Describe products in detail. l Offer a lenient refund policy. l Use 3-D Secure.
January 2018
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