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December 8, 2021 - Claire Zhou

Holiday Ecommerce Alert: Stop Chargeback Fraud with These Tips

The holiday season is supposed to be the most wonderful time of the year. But for e-commerce merchants that become the victims of chargeback fraud, it’s anything but joyous. 

Many online retailers will generate as much as 40% of their annual revenue during the holidays. Last year, e-commerce sales skyrocketed more than 36% compared to 2019, coupled with a longer shopping season as more retailers tried to bring shoppers out of their lockdown cabin fevers. But with an uptick in shopping also comes an increase in chargeback fraud, and retailers are often left to foot the bill. 

It’s time to say “No more!” Use these chargeback fraud prevention tips to enjoy a safer and more prosperous holiday shopping season in 2021. 

Know the Situations That Can Result in a Chargeback

Chargebacks happen, and in many cases, they are completely legitimate. Perhaps a customer received a damaged item, or maybe they never received their order at all. This is what makes chargeback fraud so prevalent, though. Requests may seem reasonable on the surface, making the retailer feel obligated to comply.

The best approach for retailers is to first understand the variety of circumstances under which a chargeback may occur. Then, try to find ways to safeguard against those circumstances. For example, a customer might dispute a charge if they never receive their item. A great tracking system and proof of delivery can mitigate these instances if the request is fraudulent. 

Collect Adequate Data on Each Transaction

When a customer purchases from a brick-and-mortar location, it’s common practice to collect a signature when a credit card purchase is made. However, online retailers don’t have this option. Instead, you will need to rely on other data sources, and the more the merrier. 

For example, a retailer might ask for a full credit card number and cross-reference it with the cardholder’s name, address, phone number, and other data. You might also verify the purchase via a text message and have the shopper confirm their order before it’s placed. 

These are small actions that create minimal friction but can provide greater peace of mind for e-commerce transactions and reduce chargeback fraud.

Review Each Customer’s Purchase and Returns History

Frequent abusers of your return policy can be hard to spot unless you are intentionally looking for them. Keep tabs on whether you receive a lot of chargebacks from the same customer. This may indicate chargeback fraud and allow you to take action before they purchase again.

Leverage Chargeback Fraud Prevention Tools

Purpose-built tools like DataVisor support chargeback fraud prevention at scale. Our holistic AI and ML technologies work in the background to analyze billions of transactional data points in real time to detect more fraud with greater accuracy. Use our platform to find links between user behaviors that signal fraud, identify repeat offenders, and allow good actors to pass through with little or no friction.


How does DataVisor reduce holiday chargeback fraud by supporting the above tips? Read more here to prepare for a profitable holiday shopping season.

Photo of Claire Zhou
about Claire Zhou
Claire is a Senior Product Marketing Manager at DataVisor with over 5 years of marketing experience in security and fin-tech. She is passionate about empowering enterprise customers with AI-based solutions. Her expertise spans data analytics, cybersecurity, and fraud prevention. Claire has an MBA from UCLA.
Photo of Claire Zhou
about Claire Zhou
Claire is a Senior Product Marketing Manager at DataVisor with over 5 years of marketing experience in security and fin-tech. She is passionate about empowering enterprise customers with AI-based solutions. Her expertise spans data analytics, cybersecurity, and fraud prevention. Claire has an MBA from UCLA.