As online commerce continues to surge, chargeback fraud victimizes more and more retailers. Experts report that chargebacks will cost merchants over $100 billion in 2023, and false claims and abuse of the chargeback process are a growing threat to merchants.
And yet many retailers remain unaware of chargeback fraud and its harmful impacts on business revenues.
However, there is a good reason why: fraud and first-party abuse is hard to identify. Customers dispute a valid transaction for many different reasons. That includes forgetfulness, impatience with failed deliveries or the simple inability to read a billing descriptor. With such a wide range of motivations, it is a challenge to distinguish honest disputes from fraudsters with false claims.
Still, the cost of chargeback fraud is simply too high to ignore. For every $100 in chargebacks, your true chargeback cost is $240. The hidden expenses of wasted time, expensive fees, penalties or additional losses of goods and services add up.
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Unfortunately for all of us in the industry, the problem of chargeback fraud continues to grow, and for several reasons:
First, ecommerce continues its rapid expansion. Here are statistics as proof: revenue in the ecommerce market is projected to reach $3.64 trillion in 2023. And that market value is expected to increase by 11.17% each year. Internet payments mean more purchases.
However, the internet also causes problems. More transactions mean more...
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