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April 07, 2022
by David Goodale

What to do if you start getting too many chargebacks because of credit card fraud

(Slightly edited from video transcript for greater readability)

Key Takeaways

Identify the cause of the chargebacks
Every chargeback has a reason code that states the reason for the chargeback. Identify why this is occurring and think about what you can do to prevent it.
Optimize customer service
Provide excellent customer service and address any customer concerns promptly. If a dispute is likely to result in a chargeback sometimes it's better to just give the customer a refund.
Implement fraud prevention measures
Screen transactions, especially large transactions, and use fraud prevention tools such as AVS and CVV to prevent fraudulent transactions.
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Hello, David here at I'm going to tackle a quick, but I think an important topic today, what to do if you've been targeted by fraudsters and chargebacks are rolling in stay tuned. I'll dig in with a quick bit of advice in a second.

Unfortunately from time to time, merchants get hit by fraudsters and I think anybody that works with me knows that I think fraudsters are jerks. They are if not the bane of my existence, something that does make my blood boil because people are out there with a legitimate business and then someone comes along and they're causing big problems for you. This can happen to merchants my first tidbit of advice: It can happen to anyone. I have a very large urgent client that's being targeted or has been targeted for card testing. And I've had other small clients who have had been targeted for card testing or chargebacks. I had another client that sells outdoor equipment and they had fraudsters target them for some very expensive gear that basically was stolen due to fraud. Anytime this happens I'm never happy about it.

I don't like it when my clients are businesses are hurt. What should you do? The first thing you should do is if you think you're being targeted by fraud, talk to your processor, they will have advice for you about what to do, how to start spot checking orders. Even if it's a short term like emergency, where you're manually spotting every order also verify this is a super important part. If you think a whole bunch of chargebacks are going to come in, let the processor know sometimes businesses I've had businesses say, oh, I listen. I'm, I'm kind of worried to talk to you about this because I don't want to get in trouble. I don't want my account to be shut down. It's like, no, you know how you get in trouble is don't give anyone a heads up and then it hits you it side swipes you.

When this occurs merchants think what the heck is happening? Most processors, any good processor should always appreciate that. And if you're being a targeted by fraud or you're being attacked, let the processor know. First of also that if there's any inquiries from Visa and MasterCard about your chargeback rates, they can say, no, this merchant pro actively reached out to us. They let us know what's going on. This is what they're doing to address the problem. They have a remediation plan in place that basically being as proactive as you can. In terms of managing your account the best thing you can do, which is a separate topic from the actual technical fix, which can be obviously scrubbing orders, may annually using 3d secured cards to prevent fraud, reason code chargebacks. I have another client that has this really interesting online store, when people are checking out on an e-commerce website, it launches a video chat session on their page, on their phone or in the browser.

It goes to a live agent who talks to them who says: "Hey, I need you to hold photo ID up to the camera so I can see it and say and say this phrase". The're lots of tools you can use. This is really not a long anti fraud video. This is more if you're being targeted by chargebacks, and you're worried about your account, what to do, talk to your processor, don't be afraid. We are here to help. We're not here to cause a problem. And trust me, I'm no more of a fan of fraudsters than any than you are. As a business owner, we both wanted to stop. And this was a very short little tidbit. I don't know if it was helpful, but I hope to anybody, whoever is targeted or worried about their account, I hope this is encourages you to speak with your processor. Thanks for watching. I hope you don't have a fraud problem, or if you do, you deal with it, you can get onto a regular life. Have a great day there. Bye. Now.

Related Topics
April 19, 2022
A chargeback is a dispute between a customer and the business. In this video we explore what a chargeback is, and some of the reasons that chargebacks occur.
February 07, 2023
Card testing is an increasing problem for #ecommerce merchants. Fraudsters are constantly looking for ways to test cards. It's even a problem for payment processors, Visa and Mastercard. In this video David explains what card testing is, why fraudsters do it, and how to stop it, in addition to advice on how to get some of the fees reversed when it occurs.
January 20, 2022
Hello, David here at Today I'm going to tackle a very frustrating topic. Sometimes it's infuriating. What do you do when you get a chargeback and you lose it and it's completely unfair? What's left? Stay tuned, I'm going to do my best to help in one second.
May 14, 2021
In the past the best way to manually screen suspicious orders was to call the customer on the phone and ask them questions. Now, with modern web based video technologies it's possible to validate customers in a way that was never previously possible.
March 16, 2018
Visa is addressing some of the most common chargeback related complaints from merchants. Going forward, chargebacks are a thing of the past and will now be known as disputes.
March 22, 2023
A positive AVS result is an indicator of a legitimate transaction. In this short explainer video David explains what AVS is, how it works, and things to be aware of when relying on an AVS security result for any particular order.
March 25, 2023
It can be difficult to win a chargeback dispute. David explores different ways to shift the odds into your favour.
March 29, 2023
David explains what two factor authentication is, how it works, and how it shifts chargeback risk for fraud onto the card issuer and away from the merchant.
July 21, 2023
How does Visa and MasterCard chargeback arbitration work? When a merchant has fought a chargeback and lost there is still one more chance to turn it around by taking it to the card brands for arbitration.
July 28, 2023
Merchants with businesses that are prone to disputes need to be careful to stay below the Visa and MasterCard thresholds.
January 10, 2024
There is a strong argument that 3DSecure (version 2) is the single best anti-fraud tool available to any online merchant. In this video David explains what 3DSecure is, how it works, how you set it up on your website, and different ways that it can be configured.

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David Goodale About the Author

My name is David Goodale, CEO at Merchant I launched our business in 2001 and have over 20 years of expertise in the field of online payments. If you have a payments related question or project, and especially if it relates to multi-currency or international e-commerce don't hesitate to contact me. I'm always happy to help with an honest opinion, and enjoy chatting with folks from interesting businesses.

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