Rise in chargebacks and the “friendly fraud”

I was doing some research on e-commerce and I came across some information on the topic of "chargebacks" that I found to be very interesting. It stands to reason that with the huge increase of e-commerce that there would also be an increase in chargebacks, some justified, some not. It appears that one of the largest areas of chargebacks that are not justified are related to what is called "friendly fraud." You can learn quite a bit more detail by reading this Chargeback Guide but the basic jist is there are people out there who order a product online then after they receive it they report to their credit card company or bank that they did not receive the product.

The consumers company is the one that makes the decision as to the chargeback being valid or not, and if you are not aware of how the process works, as this Chargeback Tutorial points out, as a merchant you could not only not be paid for the product that you did send, but be charged an additional fee by your own bank. If you get hit by too many of these chargebacks, it can put you out of business.

While it appears that it is difficult to create a scenario where you will never experience a fraudulent chargeback, there are things you can do to help reduce the chances of one happening and there are steps you can take that can help you have the chargeback reversed. Resources such as this Chargeback e-book can give you the tools you need to deal effectively with chargebacks.