How to retrieve your money from a not-so friendly fraud

Tag: fraud protection services

How to retrieve your money from a not-so friendly fraud

How to retrieve your money from a not-so friendly fraud

A friendly fraud is probably a misnomer. In reality, it can be a harrowing experience for the merchant, who completed the transaction. Friendly fraud occurs when a cardholder files a chargeback instead of requesting a refund from the merchant for a legitimate purchase. It can be filed by mistake by the customer or even intentionally in some cases. While such incidents of disputed transactions are on the rise with the predominance of digital transactions, the following are the ways in which the merchant can mitigate the risks:

  1. Switch to a fool proof secure payment solution: It would be prudent to adopt a secure payment processor, which offers a comprehensive, multi-level risk protection to detect any fraud incidents or outliers and red flags the issue in a timely manner. Incorporation of verification tools like fingerprint, facial or retina recognition to work on mobile applications would also go a long way to prevent fraud risks.
  2. Adopt a 3D Secure authentication: Under this online payment platform, the customer’s card is promptly validated by the issuing bank, prior to the transaction. Thus, it’s extremely difficult for the customer to later claim any unauthorized charges. Some merchants are reluctant to adopt this approach owing to the fear of reduced sales conversion or cancellation of the transaction due to the customer being kept waiting for the bank confirmation.
  3. Keep the communication channels open: It is advisable to offer 24*7 support to customers for post sales services. A good business rapport would help clear any potential differences or misunderstanding with the customer. The merchant could also negotiate a lower chargeback charge or its cancellation by the customer and reduce potential monetary losses. One should also regularly apprise the customer before charging for recurring payments.
  4. Establish a solid return policy and delivery tracking mechanism: It is a good practice to make the customer aware in prior of the return, cancellation and refund policies. This would reduce the chances of chargeback filed by mistake. The merchant could also have a software to track the delivery status of the product, with a signed customer confirmation upon receipt of the product by customer at the shipping address.
  5. Maintain adequate data trail: Documentary evidence is key when it comes to validation of online transactions. This should ideally capture details of product description, agreed pricing and the date of transaction. This is vital as in many cases the chargeback is claimed on frivolous or false grounds like non-delivery of the products, delivery of counterfeit or wrong items, non-cancellation of recurring charges by the merchant inspite of customer requests and the original transaction was unauthorized in the first place. Hence the need for retention of sufficient papers to support the online transaction.
  6. Distinguish between accidental and intentional fraud: This identification is crucial. While the former can be settled by talks with the customer, the latter, being malicious in intent is a different ball game. The merchant is not in a very advantageous position as far as the law goes with limited power to get the chargeback reversed. Similar to a ‘guilty until proven innocent’ situation. This is because in most cases, it is likely that the bank would side with the customer than the merchant.

To conclude, in case one does land in the soup and has to face monetary losses from chargeback charges, loss of shipping costs and transaction processing fees, it is best to hold one’s ground. In case, the quantum of money is huge, it is best to get professional, legal advice. Further, repeat transactions with such errant customers should be absolutely avoided as the adage goes “once bitten, twice shy.”

How to ensure fraud and chargeback prevention

How to ensure fraud and chargeback prevention

Fraud and chargeback claims can malign your reputation, eventually resulting in loss in your business. In order for merchants to safeguard themselves against fraud and chargeback, it is recommended that they either choose a reliable and secure online payment platform available in the market or hire professionals to handle cases of chargeback and fraud within the company. Before we discuss the strategies for fraud and chargeback prevention, let us look at the definition of chargeback.

What is a chargeback?

Chargeback refers to an appeal made by a cardholder/consumer against fraud committed by a merchant. The appeal is made to the issuing bank. The bank deducts said amount from the merchant until the merchant is able to collect enough evidence to prove his/her case, in which case the money is returned. In some cases, the cardholder may issue a second chargeback known as pre-arbitration. This occurs when a consumer is determined to prove that he/she has been a victim of fraud at the hand of the merchant.

Let us discuss certain principles and restrictions that a merchant should look into in order to prevent fraud and chargeback.

Restriction on the number of payment attempts

Most online transactions happen through an online payment gateway. One way to minimize the risk of chargebacks is to impose a restriction on the number of times a cardholder can attempt to make a payment. Additionally, the number of purchases made through one card in a day can also be restricted. This simple principle can help you reduce the risk of chargebacks and even prevent the problem from occurring altogether.

Restrictions with regard to email

It is often found that people who come with an intention of committing fraud use multiple email addresses to make purchases using the same card. A merchant must monitor the cards that are linked to multiple email addresses. This may seem like a rather simple way of dealing with it, but it can be a highly preventative measure. It is always better to catch them before the crime occurs.

Monitoring IP addresses

Technology now makes it possible to monitor IP addresses. This can work in favor of the merchant since they can monitor the addresses and find out the e-commerce history and reputation of a particular buyer. There are multiple restrictions that a merchant can apply, such as blacklisting a particular IP address.

Customer service

Credit card companies often offer chargeback notification as a service. This means that any time a cardholder raises a dispute, the merchant is informed simultaneously. By making use of this service and providing good customer support, it is oftentimes easy to address the customer’s issues. Prompt action in such cases can help prevent chargebacks and build better customer relations for the future.

Maintaining and updating records

It is always a good idea to maintain complete and up-to-date records of all transactions made by a cardholder. These records should include dates of purchase, the amounts paid as well as authorization information. These records can be very helpful while handling and fighting chargeback disputes.

Proper training of employees

Employees should be trained on how to handle card and non-card transactions. By enlightening them on the subject, the merchant can save himself/herself from fraud altogether. Verifying signatures, requiring complete card information, etc. are just some ways that fraud can be prevented. As the popular adage goes ‘prevention is better than cure’; it would save the merchant a lot in chargeback fee if the fraud was to be prevented altogether.

Choose your battles

The merchant is charged a certain fee when a chargeback is asked for. An additional fee is imposed if the merchant decides to dispute it. Too many chargebacks also damage the merchant’s relationship with the account provider. Therefore, it is wise for the merchant to choose to dispute only the chargebacks that he/she is likely to win.

The above-mentioned steps may seem like too much for a merchant to take on by themselves. It is advisable, in such a case, to hire a chargeback management firm to deal with the issue of fraud and chargebacks, and adopt these effective strategies to safeguard your business.

How Not to Get Hacked: 8 Security Steps for Your Small Business

How Not to Get Hacked: 8 Security Steps for Your Small Business

Hacking is a very real danger for small businesses that go online to connect with more customers and improve their sales. Just like a physical store, your e-store or website is not safe unless you take proper precautions against fraudsters who want to steal your sensitive information, customer data or card details. Hackers often have other malicious intents too, like tarnishing your reputation by changing the website content or putting offensive messages on your customer’s screen. And they are fast too, which means you must be on your guard always to prevent security breaches and report hacking attacks whenever they happen. It is your legal obligation these days as well. So, here are 8 ways to get started:

  • Be more careful about access control – You need to make your website’s admin level stronger to prevent the entry of hackers. So, request your customers to use usernames and passwords that are complex and hard to guess. Changing the database prefix from wp6 to something which is more difficult to guess is a good idea too. Put a limit on login attempts, as email accounts get hacked too nowadays and sending a password reset link numerous times can pose risk. Avoid sending login information via email, or a hacker who has gained control over the account can use it for malicious purposes.
  • Never ignore updates – Installing regular updates on your system is essential if you want your security software to actually prevent hacking incidents. If you delay an update, your website will get exposed to the possibility of phishing attempts or identity thefts. Do note that hackers are constantly looking for websites that have security vulnerabilities, and once any one hacker knows how to get into your system, even others will.
  • Consider installing security applications – By installing paid security applications, you can prevent hacking attacks better. They offer an extra layer of security and conceal the identity of your website’s CMS as well. These applications work very well against automated hacking tools, which go through numerous websites in an hour to look for security vulnerabilities.
  • A WAF or Web Application Firewall is a must – This software or hardware based firewall is like a filter between your data connection and website server. It reads all the data that passes through it and can hence prevent hacks, malicious bots and spamming. A WAF is usually cloud-based and has complete control on the incoming traffic for your website.
  • Enhance network security – There are some simple measures you can take to avoid getting hacked on a daily basis. For instance, make sure your customers as well as employees change their passwords regularly. Also, passwords should be complex, hard to guess and should never be noted down anywhere. Logins should expire if the session is inactive for a while. And every time a device is connected to a network, it should be checked for malware.
  • Use a payment gateway with SSL – Every small business needs to use a secure payment gateway like PayTabs where an encrypted SSL protocol is used to transfer sensitive information between your database and website. This way, no one can read or access data like customer details or card information while they are being transferred, without proper authorization.
  • Avoid free Wi-Fi – If you are connecting to the internet outside office, try using a private hotspot through your smartphone or a VPN. Stay away from free Wi-Fi connections. A VPN will first log you into a private network before you can gain access to an open network, and hence is an added layer of safety.
  • Backup always – A website can sometimes become a prey to hacking attacks, despite the many security measures you take. Hence, it is wise to backup data and files every day, multiple times. Try to backup both onsite and offsite and in several locations. This way, you will still have your data if your hard drive fails.

As a small business in the online world, you need to be extra careful to keep hackers and fraudsters at bay. So, keep the above tips in mind and stay updated with steps to prevent hacking in future as well.

4 Ways to Prevent Credit Card Fraud at Your Business

4 Ways to Prevent Credit Card Fraud at Your Business

It is true that online businesses have made life easy for most people all over the world, as long as they have a laptop, tablet or smartphone. Shopping for clothes, grocery, jewelry and even insurance has become a piece of cake! You can buy things to your heart’s content from the comfort of your home or your office or you can place an order even on the go. Digitization has also helped online merchants to connect with more customers than ever, and they now have a chance to expand their businesses and earn more in an easier manner.

The biggest concern for e-stores

But like everything in life, e-stores have a major weakness. And that is, they are highly susceptible to credit card frauds. Besides hacking and phishing, account takeover and identity thefts are other frauds you might face from time to time, as an online merchant. Fraudsters might steal personal and financial information of customers, or steal usernames and passwords to make unauthorized purchases. Frauds are especially harmful for small businesses and hence it is essential that you follow these tips to prevent them:

  • PCI compliant payment gateway – To protect customer data against online frauds, the PCI SSC or Payment Card Industry Security Standards Council has come up with a set of best practices. And this is mandatory for online businesses to follow. So, it makes sense to use a payment gateway like PayTabs that is PCI compliant and has a double-layered fraud prevention system.


  • Keep an eye on transactions – As a merchant, you surely have an idea about the buying patterns of different customers. You know those who buy expensive products or buy in bulk. So, monitor transactions and your accounts daily to watch out for suspicious shipping information or inconsistent billing addresses. Tools for tracking IP addresses can also help, as they will alert you in case any address is originating from a fraud-prone area or country. Also note that frauds generate more from free email addresses than paid ones.


  • Use AVS and ask for CVV – AVS or Address Verification System is used by many online merchants to compare the customer address on a credit card company’s file with the numerical part of the address on the actual credit card. Use a payment gateway that does this checking automatically for you. The CVV on the other hand is the 3 or 4 digit security code that you will find on the back of credit cards. Now, if you are wondering why asking for the CVV is effective every time, it is because as per PCI rules, CVV cannot be stored with card owner name or credit card number. So, unless a fraudster steals a credit card, they cannot get hold of the CVV. Payment processors like PayTabs always include a tool that asks the shopper for the CVV number while checking out.
  • Use only the latest software and platforms – Providers of operating systems constantly update the software with security measures that prevent attacks from malware, viruses and frauds. So make sure you run only the latest operating system. Also install and update anti-spyware and anti-malware software from time to time, to prevent fraud attacks. These security software products should be business grade and not free ones with limited features.

Besides the above measures, try setting limits in terms of dollar value or the number of purchases you will accept from the same account per day. This can minimize your losses in case of fraud. Also, make sure your customers provide a strong alphanumeric password which is at least 8-charcater long and contains a special character or a capital to be extra safe. Inform your customers that long and complex passwords are necessary to prevent hacking. Otherwise, hackers can run programs that will run through all possible permutations of a password and crack it.

A little discretion and care can help you keep your online business safe from frauds. This will not only prevent monetary losses but also protect your reputation in the industry.

7 Tips for Safe Online Transactions

7 Tips for Safe Online Transactions

There are many reasons to be vigilant while making payments online. Online frauds are on a historic rise these days. According to a shocking statistic from Juniper Research in 2016, up to 70% of all types of credit card frauds are mainly the card not present (CNP) transactions.

Both merchants and customers are targeted by these scammers in the United States. In the September month alone of 2014, 52% of total online attacks were recorded in the US. According to Juniper, the major factors leading to the astounding rates of online payment frauds are use of mobile payments, unprecedented growth of e-commerce, manifold increase in money flows worldwide, data breaches and Card Not Present fraud influx.

There are different types of fraud in the e-commerce space and those frauds include clean fraud, account takeover, triangulation fraud, affiliate fraud, Merchant fraud, identity fraud, and reshipping.

Here are seven tips for safe online transactions.

1. Use advanced anti-malware program
It will protect both classified and unclassified attacks on your computer and other digital devices you are using. Make sure your anti-malware program is updated or its auto update option is “on”. Make sure that the antivirus program is able to detect newly created and mutated malware threats even before it’s included in the database of the automatic updates.

2. Watch out for security vulnerabilities in your PC
Some of the malware programs are designed to manipulate the security vulnerabilities in the OS and web browsers and steal your financial data. You can run System Mechanic security optimizer, which will detect and fix such vulnerabilities in both the web browser and the operating system. Always keep your web browser and operating system up to date.

3. Make sure you are using a secure connection
When you are using a secured connection the URL begins with https://, but in all other cases it begins with http://. So make sure you are using https.

4. Deal with reputed websites only
Do not directly pay to any website unless you know about it. The advanced security features used in payment processor such as PayTabs will prevent your financial information from getting into wrong hands.

Using PayTabs is the best way to stay protected against suspicious websites and online crooks. The advance security features used by PayTabs will make sure that your confidential financial information is safe without any possibility of leaking.

5. Use credit cards for online shopping
There is a word of caution for all online shoppers: Make sure you perform online shopping using a credit card and not a debit card. What makes using debit card extremely risky is the fact that it is linked to your bank account.

With spending limit, credit cards cannot be misused to the extent a debit card can be. It is pretty easy to dispute fraudulent charges on a credit card as compared to recovering the money taken out from a debit card.

These days, onetime use credit cards are also in fashion. These cards are designed specifically for online shopping.

6. Do not use public computers
In order to maintain security during online transactions, make sure that you’re using your own computer or mobile device. Do not use the computers installed at public libraries or internet cafes, as these computers can easily be manipulated by tweaking its hardware or software.

7. Set a strong and complex password
Don’t use common passwords or the password that can easily be guessed. Use a combination of alphanumeric and special characters and make sure the password length is more than 6 digits.

Final words
If you suspect that your credit card has been misused, you can immediately inform your bank. If you are in the US, you can contact agencies like Experian, TransUnion, or Equifax. The sooner you report, the better it is. Your alarm bells should ring if the offer given is too good to be true. Always buy from a trusted vendor and check their address and contact details.