What is a fraud chargeback and how can I defend and avoid it?
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Merchant Dispute Management
What is a fraud chargeback?
If you receive a fraud-related chargeback for a transaction, it means that the cardholder claims they did not authorize or participate in the transaction - the transaction is not legitimate and the cardholder wants their money back.
How to defend a fraud chargeback?
Defending fraud chargebacks is difficult, and generally it is more effective to focus on preventing them.
If you do receive a fraud chargeback and want to defend it, you need to provide documentation that shows the cardholder authorized or participated in the transaction. See Defense requirements for details.
How to avoid fraud chargebacks?
The most effective solution against fraudulent chargebacks (on E-commerce transactions) is using 3D Secure authentication.
If you choose not to enable 3D Secure, we recommend you to understand fraudulent shopper patterns and to actively refuse payments using our RevenueProtect risk engine.
Next to detecting fraud patterns, you can set a capture delay on authorized payments (not to exceed 7 days from the authorization date) and, if a Notification of Fraud is received, cancel the capture.
Within the capture delay period, you can verify the shopper by taking the following steps:
- Contact and verify the shopper before shipping the goods (recommended for high value orders)
- Use Address Verification System to verify the shopper's billing address
- Change of shipping address (especially to pick up locations) can be suspicious shopper behavior
Another option is to review transactions using Case management which allows you to manually review suspicious transactions before they are captured.
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