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Preventing Chargebacks

How to prevent chargebacks
 
Point of Sale
  1. Obtain an authorization for every transaction.
  2. Always call your authorization center when you receive a “Call” message in response to an authorization request.
  3. Do not complete any transaction if the authorization request was declined.
  4. Get the cardholder’s signature.
  5. Enter each transaction into the point‐of‐sale terminal only once.
  6. Communicate merchandise return, refund, and/or service cancellation policies to the cardholder at the time of the transaction.
  7. Void all incorrect sale receipts and make sure that transactions are processed only once. 
Fulfillment (Card not present)
  1. Use the Fraud prevention tools offered by the gateway
    1. Address Verification Services (AVS)
    2. Card Code Verification (CCV)
    3. Other solutions offered may include:
      1. Amount Filter - Uses lower and upper transaction amount thresholds to restrict high-risk transactions often to test the validity of card numbers
      2. Velocity Filter - Limits the total number of transactions received per hour, preventing high-volume attacks common with fraudulent transactions. 
      3. Shipping-Billing Mismatch Filter – Identifies high-risk transactions with different shipping and billing addresses, potentially indicating purchases made using a stolen credit card.
      4. Transaction IP Velocity Filter – Isolates suspicious activity from a single source by identifying excessive transactions received from the same IP address.
      5. Suspicious Transaction Filter – Reviews highly suspicious transactions using proprietary criteria identified by Authorize.Net’s dedicated Fraud Management Team.
      6. Authorized AIM IP Addresses – Allows merchants submitting AIM transactions to designate specific server IP addresses that are authorized to submit transactions.
      7. IP Address Blocking – Blocks transactions from IP addresses known to have been used in fraudulent activity.
  2. Inform customers about the status of their transactions.
  3. If the item(s) or services(s) ordered by the cardholder will be delayed, inform the cardholder in writing of the delay and the expected date of delivery or service.
  4. If the item ordered by the cardholder is out of stock or not available and delivery will be delayed, inform the cardholder in writing. Also, give the cardholder the option to purchase a similar item or cancel the transaction
  5. ​Require Complete Order Information
    1. Although a customer may legitimately submit different billing and shipping information, such informational discrepancies can indicate a fraudulent transaction. Therefore, consider requiring complete order information, e.g., a full address and phone number, and be cautious about accepting orders with different shipping and billing addresses or urgent shipping instructions. Do everything you can to validate the order before processing, even if it means calling the customer for confirmation.
Processing Transactions
  1. Insure your credit card machine is batching all transactions on a nightly basis. 
  2. If a customer requests cancellation or refund, always respond to the request in a prompt manner.

Reviewed 2017-08-10.