5 Tips on Fighting Friendly Fraud

Friendly fraud is a phenomenon that is taking place due to relaxed credit card company policies. This occurs when an individual purchases something with a credit card and then cancels the transaction with the credit card company. The consumer usually gets to keep the product and avoid paying for it. Here are a few tips on fighting friendly fraud for your business.

1. Require Signature

If you are selling a physical product, you need to require a signature once your customer receives the product. Even if the customer purchases it online, when you ship it, you should ask him to sign for it. Once the customer signs that he received the product and that it is in good condition, it becomes very difficult for him to cancel the transaction on his credit card. Without a signature, there is no way to prove that the customer actually received the goods or actually ordered them.

2. Verification Code

Another way that you can fight friendly fraud is to require the verification code on the back of a credit card when a purchase is made. The verification code is considered a way to prove that a customer was present when the purchase was made. If the verification code is not required, someone else could easily use the credit card just by getting the numbers on the front of it. Requiring the verification code helps ensure that the card is physically present at the time of purchase.

3. Easily Accessible Customer Service

When you set up your business, it is important for you to make it very easy for customers to contact customer service. Sometimes, the problem with a transaction is that customers are too lazy to contact customer service about a problem with a product. Instead of doing that, they will simply call their credit card company and have the transaction canceled. This leads to a charge back for the merchant, who will be responsible for the fees associated with this process. 

4. Blacklist Databases

It is also important that you keep or participate in a blacklist database. Many large companies will keep databases of customers who frequently attempt to get refunds on purchases. By keeping the names, they can prevent future sales to those individuals. Some companies will work together in order to contribute as many names of fraudulent individuals as possible. This will cut down on the number of people who can successfully continue to make fraudulent purchases. 

5. Easy Returns

It is also important to set up a simple return policy for all purchases. Make it easy for your customers to send things back to you if they are unhappy. Some businesses make it difficult because they think that it will keep them from having to accept returned merchandise. However, this often leads to canceled credit card transactions and additional fees for the merchant. As soon as a sale is made, provide the information about your return policy to your customers.