Feb 02, 2021 - 08:23 AM
Chargebacks are the bane of any seller and more so those just starting out. It may not be the majority of people but the few bad eggs who come to your store with ulterior motives can drive your shop to losses or worse, a collapse.
Besides the loss of revenue and negative publicity, you stand to incur the chargeback fees and brand damage as a result of possible resale of your goods on the black market. Your payment processor could also terminate your account--and when this happens, usually the only option is to go with high risk industry payment processors who charge an arm and a leg!
Image source: Cottonbro, PexelsSome Methods for Preventing Fraud
• Verifying each customer's identity by following a few steps and using AVS (Address Verification System) to make sure they are who they say they are.
• Gathering offline data like the customer's name, address, email, and phone number for an initial check. This data is then matched with online data including IP addresses, cookies and location patterns among others. You can use applications like Neustar for help with this.
• Verifying the device that is being used by a customer to connect. You can then match the data from the identity verification above to device fingerprints and find additional connections between the person and their device.
• Making sure that your store is PCISSC (Payment Card Industry Security Standards Council) compliant. Also find out if your payment processor can help you with this compliance or even handle it altogether. A platform like PayPal builds PCI compliance into all their solutions.
• Monitoring your transactions and accounts to note red flags like inconsistent shipping information and billing for your biggest clients because they have established buying patterns.
• Using tools to track customer IP addresses and raise the security for IPs based in places where there are high instances of fraud. Free email addresses should also get extra attention because more fraud is perpetrated by holders of free and anonymous email addresses like Gmail and Yahoo.
• Setting limits for the number of purchases and total amount of money that your store accepts from a given customer in a single day or other period of your choosing. This will ensure that in case of fraud, there is a maximum account that won't be reached.
• Asking for the CVV (Card Verification Value) in order to minimise fraud because unless the fraudster actually has the physical card, they cannot obtain this code.
• Making your password requirements tougher so that hackers have a hard time cracking them even if they use complex softwares to try. Let your customers know why you need them to have strong passwords and they will mostly oblige when they realize that it's for their own protection.
• Keeping your software up to date with security patches to fix and resolve any vulnerabilities you may have on your platform. This is especially important for WooCommerce. Outdated or poorly developed plugins are the #1 cause of security breaches that can take your site down, causing revenue loss and brand damage.
• Making sure that your anti-malware and anti-spyware software are business grade and up to date because there are attacks that target outdated software. Doing this is also important for insurance purposes. If you were willfully negligent, your insurance provider may not compensate you in the case of an attack.Five Applications for Preventing Fraud Online
As there are many tools out there that one may use to prevent chargebacks and ecommerce fraud in general, it follows that a few stand out from the rest.
Besides Neustar which was mentioned above, here is a brief outline of five such applications that consistently appear in anti-fraud applications lists.
This application is the first here, and with good reason. More than 18 years of experience means that they have what it takes to help companies fight fraud and it is no wonder that brands like Sony and Walmart trust them for fraud protection.
Their pricing starts from 0.4% for their fixed percentage pricing model depending on the volume of sales you generate and other factors.
Image source: Shopify App Store
Trusted by Lacoste, RiteAid and Samsung among others, this application is a well-rounded solution against fraud that uses machine learning.
Their software is comprised of three solutions namely: payments compliance, abuse prevention, and revenue protection. They offer a 14-day free trial and $1,500 a month standard payment, with all approved orders charged at 8% of the total order amount.
Image source: Financial IT
This software analyzes transactions and reports back in a fraction of a second. It also uses blacklists data including credit cards, IP addresses, devices, and email addresses to catch fraudsters. They have five plans; the cheapest being free and the most expensive one being $1,249.95 per month.
Image source: Shopify App Store
This application approves more good orders and improves conversions for the e-commerce store it's plugged into. Single-click and product page checkouts make it that much faster for customers to make a purchase safely. For their pricing though, you have to go to their site and request for a custom quote.
Image source: Product Hunt
Last but not least, this application analyzes visitors in real time and provides a single score that assesses the fraud risk that each user on your site poses. For users presenting a suspiciously low score, you are able to investigate them before a chargeback.
Pricing starts at $29.95 per month for the starter edition to $100 per month for their full edition. You also have the option to get custom pricing if you prefer.
Image source: NS8An Investment in Your Store's Security
Because criminals online are getting more innovative, you need to get proactive at securing your store. A growing brand will have their attention pulled in many different directions at any given time so it's a good idea to delegate sensitive issues like security to firms that specialise in it.
Take the time to set this up and your customers will appreciate the extra security. It may dent your profit margins a little in the short term but if you suffer too many chargebacks or embarrassing security breaches, your business/brand could be seriously damaged.