Without the necessary expertise in local markets, the perceived threat of fraud often acts as a disincentive to retailers expanding online into foreign markets. As outlined in the following article, unscrupulous shoppers contribute significantly to this perception. Working with a partner like eShopWorld guarantees a 0% fraud risk, and offers peace of mind that lets you focus on selling more, and maximizing the opportunity.
Chargeback fraud is leading to significant losses for online retailers, according to a new report.
An anonymous high-end retail CIO told Computing.co.uk that the chargeback loophole is leaving them with no choice but to accept the loss.
The anonymous CIO said:
"This loophole has to potential to set the online payment industry back, as this level of fraud continues to rise retailers will start to lose faith in the system….Banks do not lose any money so have no interest in fixing the situation. The retail industry, merchants, banks and the courier services need to work together to bring about new standards in the same way as they did with [software-based authentication process] 3D secure”
Friendly fraud or chargeback fraud is when consumers fraudulently use the chargeback process to secure a refund. Consumers illegitimately dispute a transaction with the bank instead of contacting the merchant for a refund. They might claim:
- The item was not delivered.
- The item was not as described or was defective.
- The original transaction was not authorized.
- A recurring transaction was not canceled as requested.
These could be false claims by the cardholder and the facts could be:
- The cardholder’s original intention was to get something for free.
- The cardholder simply did not understand the process.
- The cardholder experienced buyer’s remorse and regretted the purchase.
- A family member made the purchase, but the primary cardholder didn’t want to honor the charges.
- The cardholder didn’t recognize the charge or forgot about making the purchase.
- The cardholder didn’t qualify for a traditional refund (for example, the time limit had passed).
Dishonest consumers exist in every market around the world, often mostly in markets that might surprise you. They will work to find a way to game the system but this shouldn’t discourage you from entering a market. It’s all about local expertise, and knowing how to mitigate the risk.
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