Fraud is too sneaky.
Most small to medium size e-commerce owners don’t know much about fraud. Sometimes, they don’t realize that their website is being a target for fraudsters.
But if your e-commerce website sells easy resell-type products while not having any fraud prevention solution in place, you become the easy target.
Why should I care about credit card chargebacks?
Here is the bad news. If your e-commerce website is a victim of fraud, you will be charged 3 times…
This reason is what makes being an e-commerce business owner so difficult. Here’s why:
- You paid for the product since you shipped it days BEFORE receiving a chargeback
- You have to pay the bank
- You receive a notification that it is a fraudulent order
- So, you have to pay the chargeback fee (~$30) for the fraudulent order
For instance, a 100$ product is a fraud cost of ~$230 for you!
How to identify fraudulent orders
It depends on your payment gateway but most of the time the orders should be sort in 3 categories:
- Green: The good orders.
- Red: The bad orders.
- Orange: When your scoring machine can’t decide, it places the order into the orange category. Therefore, you should these orders manually.
Most payment gateways accept green AND THE ORANGE orders after a small delay…
If after your manual review, you verified that the orange was OK, then great. We call that kind of order a “false positive”. If this is the case, the bank will contact the customer directly to validate the purchase order.
How do I prevent this?
The easiest way to mitigate this problem is to use a platform that will automatically detect whether an order is fraudulent or not (green, red, orange) for you. This will remove a lot of headache as a business owner.
At SELLsecure, we eliminate the entire manual review process. Our technology is able to verify all information about your customer by collecting their entire online footprint. We then give each customer a “fraud score” so you’re able to skip the greens and only worry about the red, sometimes orange customer.
Dealing with chargebacks are a pain for all e-commerce business owners. Chargebacks will result in you losing more than double of the price for your sold product. The best solution is to use online resources that automatically detects, sorts and notifies you when there is a potential fraudulent order.
If you’re an e-commerce business owner that’s dealt with fraud orders before, please share your experience and solutions to prevent it below. Comment any questions you have about chargebacks or credit card fraud and we’ll be sure to respond ASAP!