For today’s eCommerce merchants, chargeback fraud is an ever-present problem. After all, it’s not easy to validate customers that you may never see or hear before they make a purchase. And the problem’s a costly one.
According to recent estimates, every dollar of chargeback fraud costs eCommerce companies three dollars in direct costs. And for that reason, most eCommerce businesses are hyper-vigilant in trying to prevent chargebacks. But that creates a different problem for those businesses — a customer service problem — that can be far more costly over the long haul.
The problem is that sometimes, legitimate customers experience transaction problems that are anything but intentional. But when they contact a retailer looking for help, they’re often met with skepticism. And that creates reputational challenges and the possibility of long-term brand damage. To avoid that, here’s how eCommerce businesses should be training their customer service representatives to handle transaction problems and potential cases of fraud.
Always Give the Customer the Benefit of the Doubt
The first thing that eCommerce businesses should do is to train their customer service representatives to never assume that a customer is lying. Upon hearing from a customer that’s reporting a suspicious or unknown transaction, they should instead respond with concern and empathy.
By doing so, they’ll prevent the situation from growing confrontational. Otherwise, the situation will instead be unsalvageable. A customer with a problem — either real or imagined — is looking for help, not recriminations. And most of the time, customers calling in that are attempting to commit fraud are going to be looking for the opportunity to short-circuit the conversation anyway. That way, when they contact their financial institution to report a problem, they can legitimately say that the business refused to help them.
Establish an Investigation Process and Stick To It
The next thing to do is to give the customer service representatives an investigation playbook to follow. That will help them to determine when a customer really has a problem and when they may be looking to exploit the business. The steps in that process should include:
- Examining the specifics of the transaction (including billing address, shipping address, and the credit card information entered at the time of purchase)
- Comparing the transaction to the customer’s purchase and return history
- Comparing the order’s origin IP address region to the customer’s billing and/or shipping address
- Looking for corroborating information such as delivery confirmations, delivery signatures, or other identifying data
- Looking for evidence of previously declined transactions
The idea is to look for any red flags that suggest that the customer isn’t being truthful about the transaction in question. If nothing obvious is present it’s best to simply process a refund and move on. A single wrongfully accused customer can cause reputational harm that’s far more damaging than a chargeback will ever do.
Be Ready With Helpful Information For Victimized Customers
So far, the steps covered here revolve around tactfully handling a customer reporting a problematic transaction without offending them or becoming easy prey for fraudsters. But the fact is — some of the customers that come calling for help will turn out to be victims themselves. And that, sad to say, is an opportunity for an eCommerce business to win over a customer for life.
In those situations, it’s critical to respond to the customer by offering them as much helpful information as possible. For that reason, it’s a good idea to pre-prepare a guide on how to prevent identity theft to give to customers when necessary. And it’s also a good idea to develop a procedure for the customer service representatives to gather any relevant transaction data to aid in the customer’s investigation of the incident.
Handling things in this way goes a long way toward establishing customer trust. It’s a way of letting customers know that the data you collect from them — like their financial and personal information — isn’t just for the business’s benefit. By acting in the customer’s interests using the data on hand, you’re letting the customer know that you’re a good steward of that data. And that will encourage them to continue to trust the business even after the situation’s resolved.
Beyond that, every eCommerce business should maintain a contact list for major banks and payment processors. Ideally, they should also try to establish relationships with contacts in their fraud prevention and investigation departments. The idea is to remove any communications roadblocks to effectively aid a victimized customer as fast as possible. They’ll appreciate the effort and will be less likely to hold any ill will against the eCommerce business in the aftermath of an incident.
The Bottom Line
At the end of the day, chargeback fraud is and will continue to be a major problem for eCommerce businesses for the foreseeable future. But that doesn’t mean that they should ignore the plight of real customers who may have been victims of fraud, themselves. Instead, those businesses should establish procedures that balance their own needs with those of their customers.
And that effort always starts with making sure customer service representatives know exactly how to respond to transaction problems and possible cases of fraud. They should be kind, helpful, and ready to assist — while simultaneously trying to assess the situation to protect the business’s interests. And when it turns out that a customer is a victim, too, they should be ready to offer them whatever support they need to rectify the situation.
