Chargeback fraud and card not present fraud may seem like a distant, remote threat to many retailers and businesses — that is, until it happens in your own backyard.
Recently, a sports equipment store reported that they fell victim to chargeback fraud when they delivered a $1,000 machine to a customer, as ordered. The customer claimed he never authorized the purchase, and his credit card company reimbursed him in full, leaving the store itself in the hole without payment (and without the machine). However, later that same day, that exact machine was spotted up for sale on an internet classifieds website.
"They even used our same photos that we use on our website as well and then just put it on there at the same price he bought it at as well," said the store owner. Though the company is fighting against the chargebacks, the customer continues to claim no knowledge of any wrongdoing.
This incident is just one more unfortunate example of the need for better card not present fraud prevention measures for businesses themselves. Some institutions, such as the National Online Retailers Association (NORA), says that when card not present fraud prevention strategies were first created to protect customers, they forgot to protect businesses, too.
"The key fact is that retailers are still at risk and the buck still stops at retailers," said NORA chief executive Paul Greenberg. "But for everybody this is a bit of a plague and an expensive exercise for all the components in the payments process."
Chargebacks and card not present fraud become particularly problematic this time of year, when holiday shopping (and many of the subsequent returns) occur in such high volume that keeping meticulous track of every transaction can be tough, especially for smaller e-commerce retailers. And the numbers continue to grow every year: In 2012, Cyber Monday sales grew 17% from the previous year, nearing $1.5 billion. In 2016, Cyber Monday sales set a new record at $3.45 billion.
Now, more than ever, it's important for online retailers of all sizes to have appropriate and secure card not present fraud prevention technology. Make sure that you're doing all you can to protect your customers — and yourself.