As the public avoided contact and most shopping went online, retailers prepared to switch to the new way of business. Little did they anticipate the challenges that would come with the surge in online purchases. Now, online sellers have to deal with a nightmare not so new to eCommerce; frequent chargebacks.
Spotting the ongoing influx of purchases and confusion, fraudsters hastened to take advantage of unexpecting business owners.
“All of a sudden, they were attacked with chargebacks. Most newbie entrepreneurs weren’t prepared to handle that,” says Dan Stanbridge, a senior VP at Paysafe Group.
Sectors like entertainment and travel witnessed a surge in chargebacks amidst canceled flights and hotel bookings.
Traditional fraud schemes also dominated. Cases of identity theft—involving anyone from a cybercrook to family members taking over your card account or creating one with your credentials—increased through 2020, jumping 42 percent to over $700 billion. What follows when a victim notices the scam is a chargeback claim, and the retailer must strive to make it right.
But naughty cybercriminals stealing identities only accounted for a meager 10 percent of chargeback claims, according to McKinney, a Texas-located chargeback protection firm. Most claims are due to friendly fraud, powered by mobile apps enabling chargeback filing by the click of an icon.
Solutions like same-day delivery—a trend fueled by bigwigs like Amazon but challenging for most smaller counterparts— also worsens the situation even for big-box retailers as shoppers feel inclined to dispute the purchases they made themselves.
These friendly fraud attempts are the biggest trouble for retailers. Before the start of Coronavirus, these crimes made up 25 to 30 percent of all chargebacks, according to reports by Vesta Corp., an expert in fraud prevention. Now, he estimates the figure is 48 percent.
Final Words
As eCommerce becomes the order of the day, merchants must work to block all the loopholes cybercriminals and phony customers may use to target their businesses.
To reduce these attacks, it’s crucial to stay on high alert and focus heavily on chargeback protection. After all, online business isn’t fun unless retailers are receiving their full returns.
Author Bio: Payment industry guru Taylor Cole is a passionate payments expert from bestpaymentproviders.com who understands the complex world of merchant accounts. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie with ice cream on his backyard porch, as should all right-thinking people.
