Businessweek recently ran the article It’s Easier Than Ever to Dispute a Credit Card Charge, and Retailers Hate It. There were a few particularly interesting nuggets that confirmed some of the things that we’ve suspected were happening:
[T]echnology, along with a change in rules by payment networks such as those run by Visa Inc. and Mastercard Inc., is making that system a bigger headache for merchants, who are often left to eat the cost. Besides automating claims, banks have updated their mobile apps so users can dispute a charge simply by tapping a few buttons.
Fraudsters also began targeting merchants who take orders over the phone or online, who are usually responsible for the cost when frauds occur and don’t benefit from the added security of chip cards. The result: a spike in U.S. chargebacks.
U.S. banks are on track to process $5.6 billion worth of chargebacks this year, a 17 percent increase from two years ago
“Consumers are more aware of chargeback rights than ever,” Julie Conroy, a research director at Aite, wrote in the company’s report. There are online forums where users discuss strategies for disputing charges and how many chargebacks certain banks will allow a customer per year.
That puts e-commerce companies like us in a tough spot. Automated chargeback decisions, more secure in-store purchases, and consumer awareness of how easy it is to file a chargeback are all contributing to making an already difficult system even more difficult for merchants to ever win a case.
For our part, we’ve continued to do what we can do: prevent fraudulent orders from ever leaving our warehouse, and then fight the chargeback when one slips by. We’ve seen a few new scams this year. In turn we’ve had to fortify our chargeback system with a few more added layers of checks.