Frank Stornello, Chief Marketing and Strategy Officer at Verifi Inc., recommends using a chargeback notification protocol designed to catch direct response chargeback fraud post-sale.
Although online customers value security, front-end security measures frustrate them. Having to input too many details in order to purchase may cost more in lost sales than the cost of fraud. Many chargebacks can be resolved before they occur . For example, accessible customer service (the number for it should be listed on the bank statement) can help address customers’ concerns before they initiate chargebacks. But good customer service cannot prevent chargeback fraud altogether. Merchants need to work with issuers in order to receive notice when customers initiate chargebacks.
As Frank Stornello said in Response Magazine, “Recent statistics revealed a 40:1 ratio in terms of losing legitimate customers to overly rigid front-end controls. Chargeback alerts are one way to move that to the post-sale side in order to avoid throwing the baby out with the bathwater on the front end.”