Risky Business Part 2

Risky Business Part 2

This is a continuation on Christina's Risky Business series. Ready Risky Business Part 1!

Last time, we talked about what chargebacks are and some general tips for avoiding them. This week, we’ll go a little more in-depth. 

 First things first, if your e-commerce platform offers it, you’ll want to pay attention to the fraud analysis that comes up with each order. It will show you some flags that the order may have set up. Even if your platform doesn’t offer a fraud analysis, you’ll want to review your orders for things that stand out. For example, if the customer says their billing and shipping addresses are in New York City but the order was placed from an IP address in California, that could be a cause for concern. 

Yes, it’s true that customers may travel or have valid reasons for having set off any red flags, however, you’ll want to err on the side of caution when there’s things that just don’t make sense about an order. It’s better to play it safe and avoid a chargeback, because if a chargeback does occur, the order will be reversed and you’ll be charged a fee. Not to mention, as discussed last time, too many chargebacks can cause your payment gateway to deem you too high a risk to support and you’ll be left needing to find a new gateway. This could potentially leave you unable to process orders for a few days. 

So, getting right back to it. You’ll want to review your orders to see if anything odd is going on. If you do see flags, reach out to the customer for some information. While you could call or email the customer to confirm their order, this isn’t the best tactic because they could have given you their own email address or phone number even if they used a card they don’t really own. 

Asking the customer for a copy of their credit card, as well as a photo issued government ID, you can provide this as proof to the credit card company that  A) you looked into to the order to confirm it’s legitimacy, and B) the person who placed the order truly owns the card. When asking for a credit card image, you should ask them to hide all digits except the last 4. They could cover them up with a  finger or piece of paper, but for their protection (and your own), you should have them hide the first digits. You’ll want the image to include the whole card though, because you’ll want to check it for signs of fraud. You’ll want to see if any fonts look different (fraudsters will often scratch out information and replace it with their own, but this is usually visible), you’ll want to make sure the logos look real, etc. The process would be the same for the ID card as well. If the credit card or ID are from areas or companies where you do not know exactly what they should look like, remember, Google is your friend! Just type in “[state/province name] driver’s license” into Google and filter for image results. 

You’ll want to make sure that if you feel an order is too high a risk to support, you cancel and refund it. Ideally, this should be done within 24-48 hours of the order being placed. This is to prevent a chargeback from happening in the first place. If a customer has already issued a chargeback, they won’t be as likely to comply with your requests for information.

Here is a guide from Shopify about their built-in fraud analysis: https://help.shopify.com/manual/orders/fraud-analysis 

It will give some examples of things that could cause flags. If you’re using another platform, they likely have a guide for their own product, just check out Google!

Another thing to look out for is when the customer actually owns the credit card but files a chargeback claiming they didn’t receive the product or that it wasn’t as described, even though they did receive it, or it was as described. They do this in order to try and get a refund for a product they actually received. However, this one is a bit harder to prove. For this, you’ll want to show all evidence that the order was a low risk of fraud and that they did receive the product. Shipping tracking information is great here. If the customer signed for the order, that’s another fact on your side, but at least showing that the order was delivered is a start. 

I should note that customers may file the product not received chargeback with due cause. If the order is taking too long, they may get nervous and file a chargeback. To avoid this, you’ll want to have clear shipping times listed on your store as well as the checkout or communicate this by email after an order is placed. Providing shipping options with tracking is great too.  If any delays do come up, you’ll want to let your customers know what to expect as soon as possible and remain in touch with them along the way so that they do not feel as though their order is lost.

Chargebacks are handled completely by the credit card issuing bank, so you really want to show as much evidence as possible in hopes that they will side with you, determine the order legitimate and return the funds to you. You won’t be able to contact them to discuss the case further as they won’t be able to share information about their customer’s accounts with you (due to privacy policies). Once you submit your response (evidence) to the chargeback, you’ll need to wait for a response. This can take a little bit so you’ll need to be patient, but hopefully, you’ve provided as much evidence as possible and the credit card company will side with you. 

Chargebacks can seem scary, daunting even, but if you equip yourself with knowledge, you should be well able to handle them. Running a business comes with many risks and chargebacks are one of them. Hopefully, you won’t need to deal with many, but if you do, be prepared by having already looked into the orders and having evidence on hand. If you do lose a chargeback, don’t despair, just remain vigilant in handling your orders and you shouldn’t have too many to worry about. 

As mentioned, Google is your friend, too! So, if you are looking for more suggestions, feel free to take a look and see what you can find on anything from chargeback avoidance to responding to chargebacks.


Christina is a fraud operations specialist at Shopify and a communications freelancer with a BA in communications. She loves puppies and Beyoncé and she’s played just about every sport in the book. You can check her out and reach out to her on Instagram: @millenniallifebiz

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