50% of chargebacks are unaddressed

Tuesday 19 November 2013 10:12 CET | News

Friendly fraud chargebacks, initiated by online shoppers in card-not-present (CNP) transactions, have become an overwhelming enemy of online merchants. Online retailers are now incurring a USD 279 loss for every USD 100 of fraud loss, the highest amount since 2010, findings indicate.

A recent study unveils that despite the pressing financial consequences, merchants are only responding to 50 percent of chargeback cases, giving consumers free reign to continue friendly fraud activity. According to data from dispute mitigation company Chargebacks911, this behaviour not only leaves merchants with a significant monetary loss, but also encourages friendly fraud, a practice which threatens the future of online retailers.

Traditional brick and mortar retailers are quickly being replaced by a fast-growing internet marketplace, which relies heavily on the use of CNP transactions. Whether due to ignorance or actual intent to defraud the merchant, consumers are leveraging the loopholes provided through the chargeback process to dispute legitimate transactions. Unfortunately, many online merchants are living in fear of this activity and rarely fight back against chargebacks, due to the energy, costs and additional resources required. As a result, the consumer is taught that this method of disputing a valid purchase is a workable and logical solution with no negative outcome.

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Keywords: online fraud, chargebacks, US
Categories: Fraud & Financial Crime
Countries: World
This article is part of category

Fraud & Financial Crime

Industry Events