TAMPA BAY, Fla., Feb. 18, 2014 /PRNewswire-iReach/ -- E-commerce retailers, or "e-tailers," offer consumers the benefit of convenience--but many Internet merchants have found themselves fighting an issue that is affecting the livelihood of their business: chargebacks, which result from a consumer disputing a charge on their credit card. But according to dispute mitigation and risk management company Chargebacks911, online merchants are also battling on another front. Monica Eaton-Cardone, co-founder of Chargebacks911, says that many credit card processors are indulging in the harmful activity of discouraging merchants from disputing their chargebacks altogether, a practice which inadvertently rewards incidents of chargeback fraud and will only lead to more chargebacks, not less.
Chargebacks can occur for several reasons, but a common reason is friendly fraud, or a consumer disputing a legitimate charge in order to defraud the merchant. Studies show that 23 percent of fraud losses reported by enterprise level e-commerce sites are proven instances of "friendly fraud" (1). As friendly fraud incidents have grown, so has merchants' necessity to dispute this unjust activity, which activity can result in fines, loss of revenue and increased processing costs. But while the right to dispute applies to every merchant, Eaton-Cardone says that credit card processors are taking that right away from merchants by refusing to allow them to dispute--a practice that is not only immoral, but also against Visa and MasterCard regulations, per Eaton-Cardone.
"The issue is that some processors are telling their merchants, 'you cannot contest chargebacks'--but merchants don't need the processor's permission to defend themselves from illegitimate cases," Eaton-Cardone said. "Merchants are failing to stand up for their rights, and this only further encourages the growth of friendly fraud, because there are no repercussions for those who engage in such activity."
Eaton-Cardone says there are a variety of reasons some processors have communicated as to why this process cannot be undertaken:
-- "We don't allow you to dispute a chargeback where you didn't previously refund the cardholder because we don't believe it's in your best interest." -- "We believe merchants lose most disputes, so we strongly recommend that you don't dispute your chargebacks." -- "We don't have the man power available to handle your volume of cases." -- "There won't be enough time for you to dispute a case because our bank will only give you three (calendar) days to send us your dispute." (Visa and MasterCard mandate much longer time frames be allotted.) -- "We will be keeping any money you win back from these cases for 180 business days--it's more trouble than it's worth." -- "We won't accept these (representments) because they don't have a signed delivery receipt and our bank has stated they won't accept any representment without a physically signed delivery receipt from the cardholder." (This processor refused to accept hundreds of disputes against illegitimate chargeback fraud cases despite being provided with documentation from the actual cardholder confirming a legitimate sale in addition to an official USPS Delivery Confirmation receipt..
The major reason for the pushback, per Eaton-Cardone, is that most of these processors are ill-equipped to handle the onset and volume of chargebacks that have mirrored the growth of e-commerce and friendly fraud. In addition, processors do not make money on their merchants fighting chargebacks, but they do profit from merchants receiving them.
Eaton-Cardone encourages merchants to remain undeterred by tactics to suppress their right to take action against unfair claims. For merchants struggling with increasing chargebacks and uncooperative processors, Eaton-Cardone suggests seeking the help of a chargeback specialist who can help them avoid a significant monetary loss, while also ensuring the viability of their business. There are three types of chargeback managers:
1. Risk mitigation consultants who are trained in fighting chargebacks and advising on how to proceed to generate the best results; 2. An outsourced company that verifies the validity of each chargeback, and then responds by either accepting responsibility for the disputed transaction or providing proof of the transaction's legitimacy; 3. A chargeback system wherein employees analyze cases and then make an educated decision as to how best to settle those cases on the client's behalf.
Eaton-Cardone maintains that the above methods render chargebacks manageable, leaving merchants free to do what they do best--provide quality services to consumers.
Chargebacks911 has expanded their gross processing dollars to over $50 million per month for a variety of industries: cosmetics and skin care, insurance and educational programs, private and public entities, healthcare companies, online dating sites, insurance, retail merchandise, and bid sites. Chargebacks911's management team is also considering opening offices in Ireland and London for international expansion.
For more information about Chargebacks911 and its services, visit www.chargebacks911.com.
Co-founder Monica Eaton-Cardone established Chargebacks911 in September, 2012, out of necessity after many years as a merchant struggling to find a solution to chargeback issues. Chargebacks911 was developed specifically for merchants to offer immediate aid through proprietary technology and provide the necessary function that gives merchants the freedom to focus on their core competency and optimize their in-house skill set. Chargebacks911 specializes in servicing Internet merchants, and offers both response and resolution services for chargebacks and cardholder disputes. The company works with merchant clients to help them keep their dispute rates down and retain their ability to accept credit cards. Chargebacks911 provides a unique exception to standard dispute processing for dissatisfied consumers who wish to remedy transactional disputes, without the requirement of additional intermediaries or lengthy correspondence requirements. For more information, visit www.chargebacks911.com.
1. "'Friendly Fraud' a Hassle for You, Too." Nbcnews.com. NBC News, 19 Nov. 2010. Web. 24 Mar. 2013. redtape.nbcnews.com/_news/2010/11/19/6345525-friendly-fraud-a-hassle-for- you-too?lite.
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