Chargebacks Info – 5 Ways to Avoid Online Scams

We are now living in the technological age, where a majority of the population relies on advanced gadgets, systems, and strategies to make life easier and more convenient. Among the many technologically advanced methods that people use today, the Internet is one of the most popular and in-demand. With the Internet, it is now possible to retrieve tons of information in just a second; connecting and communicating with people from all parts of the world, in real time, also became a possibility. There is no longer any need to rely on snail mail and telegrams because with the Internet, you can see your relatives or friends and talk to them face-to-face even when you are worlds apart.


The Online Shopping Trend

Among the many uses of the Internet, online shopping has relatively become popular. Instead of going out to the malls or any physical stores, you simply have to open your computer, laptop, or even your phone, scroll through the items, click what you want to purchase, check it out, and wait for the item to be delivered to your doorstep. And to make it even easier for consumers, most online shopping sites accept credit cards and online transfer of money as a mode of payment.

With plenty of people becoming hooked to online shopping, merchants and entrepreneurs have also started making their e-commerce store. But although virtual stores are easier and cheaper to make compared to a traditional store, it also has its share of downsides. E-commerce sites are susceptible to hackers, computer criminals, script kiddies, scammers, and identity thieves. In the case of identity theft, this could lead your customers to file for chargebacks, which in turn can cost you money and ruin your reputation as a seller.

What Are Chargebacks?

A chargeback, also called a reversal, is a form of consumer protection given by issuing banks to their cardholders. With this, cardholders are given the power to file a complaint against a fraudulent charge that appeared on their statement. This is the answer of issuing banks towards the increasing incidents of identity theft that are very common among credit card holders.

All merchants are aware that getting caught in a chargeback dispute is really bad, because even when you have proven that the transaction between you and the cardholder is legal, you still need to pay several fees, not to mention that it is really time-consuming. If you want to avoid reversals, then you certainly need to avoid scammers and bogus buyers. Read on, and we’ll share tips on how to avoid scammers from ruining your business.

Protecting Your Store against Fraud


Keep Up with the Standards of the PCI Compliance

To be able to protect customers and businesses from online fraud, the PCI (Payment Card Industry) Security Standard Council has come up with several business practices that are really effective in safeguarding consumers’ data. The PCI Security Standard Council is a forum, which is participated by global brands such as MasterCard, Visa, and AMEX. Among the things that PCI requires business owners are utilizing point-to-point encryption, EMV Chips, and much more.

Monitor Transactions Daily

Apart from complying with the standards of the PCI, another way you can prevent online scams is to monitor your account daily and look for any potential fraudulent activities, including inconsistent shipping and billing information. To be able to pinpoint these fraudulent activities on your site, you can install tools that can help you track customer IP addresses so that you will be alerted if these addresses are known for bogus schemes. Make sure also to reconcile your bank account on a daily basis.

Bonus tip: Customers using free email service providers such as Gmail and Yahoo have a higher chance of being used for fraudulent activities compared to paid email service providers.

Keep Your Platform and Software Up-to-Date

With e-commerce sites vulnerable to hackers and crackers, it is really essential to update the software and upgrade security measures from time to time. By keeping your platform and software updated, you are also eliminating security patches that might harm your business.

Require Customers to Provide their CVV

Another way you can prevent fraudulent activities from harming your business is to require your customers to input the CVV code (Card Verification Value) of their credit card. The CVV is a three- or four-digit number code printed on the credit card. If the customer cannot provide the CVV of their credit card when transacting with you, that only means that the card is not in their possession and it could be that they’ve stolen the credit card number from a certain database. So always make it part of your checkout requirement to ask customers to provide their CVV.

The reason why the CVV is such an effective fraud tool is because the PCI has mandated that merchants should not store the CVV, making it impossible for fraudsters to obtain it, unless the actual credit card was stolen. But then, the owner would be able to report that to their issuing bank promptly before the thief can use it.

Utilize AVS

AVS or Address Verification System is such a useful tool in monitoring and flagging potential online scammers. This system compares the billing address used by the customer to that of the address stored on the credit card. AVS is commonly used by e-commerce sites, as it has already been proven as an effective fraud tool. It is even utilized in most payment processing solutions.

No matter how much you prepare and secure your website against fraudsters, they’ll always come back and try to damage your business. As merchants, it isn’t just our duty to make sure that we do not lose any money from these scammers; we also need to protect our customer’s data and see to it that they are kept confidential and away from the hands of these fraudsters. Follow these five tips we’ve mentioned above to keep your business and your customers safe.