Taking the Friendly Out of Fraud: Webinar Recap
If you missed last week’s webinar “Taking the Friendly Out of Fraud,” this blog post provides a convenient summary recap.
Our webinar explored key topics involved in chargebacks and friendly fraud:
- The 3 sources of chargebacks
- How to reduce operating expenses
- The value of chargeback data
- Benefits of the Kount and Chargebacks911 partnership Our initial segment began with a discussion of the three sources of chargebacks:
- Friendly Fraud. 60% to 80% of chargebacks are a result of friendly fraud. It’s important to note that friendly fraud extends across a continuum that ranges from malicious – purposeful cyber shoplifting – to innocent – consumers not recognizing a transaction made by a family member and canceling it.
- Merchant Error. 20% to 40% of chargebacks are a result of merchant error. These can be mistakes in merchant set up, transaction data, order processing, etc. For example, chargebacks can be caused by a merchant forgetting to refund a customer’s credit card account with a return, a website error, or bad customer service.
- Criminal Fraud. Approximately 1% to 10% of chargebacks are due to criminal fraud by cyber criminals using stolen credit cards and/or stolen identities.
We next discussed how to reduce operating expenses, highlighting three key factors:
- Multi-layer approach. The more layers in place to prevent fraud, the more obstacles fraudsters must overcome, and the sooner they abandon your website to seek easier targets. Kount’s multi-layer approach employs 1) real-time analytics, which analyze hundreds of data points and massive amounts of data, 2) a data orchestration hub that connects to best-in-class data providers with a single integration to data append, 3) real-time machine learning that takes advantage of massive computing and memory capacity to reveal trends in Big Data that are undetectable to humans, and 4) experienced human intelligence that provides you with best practices and fraud expertise to grow your business.
- End-to-end accountability. At one end of the continuum are preventable chargebacks due to merchant error. These can range from a merchant processing a payment but not providing a product, to delays in refunds that leads the frustrated consumer to cancel payment. At the other end of the continuum are representable chargebacks. These can be outright fraud in which a consumer files a chargeback in an attempt to get something for free, or it can be an innocent mistake, where a consumer cancels a payment because they don’t recognize the charge on their statement. In the middle of the continuum, merchant error and friendly fraud can overlap. For example, if a merchant’s Return Policy is opaque and difficult, the consumer may take the path of least resistance and simply file a chargeback. Understanding where a chargeback falls in this continuum makes it possible for the merchant to improve practices and reduce chargebacks.
- Accurate data. Having accurate data is key. Having ALL the accurate data is better. The greater a merchant’s visibility into the data surrounding transactions, the more likely it is that he or she will be able to employ a standardized, digital, accountable, relevant, workable solution that reduces chargebacks.
Next, we examined the value of chargeback data, using an example where chargeback data provided by Chargebacks911 was fed into the Kount console. A reviewer conducting a manual review of a transaction was able to quickly see that Kount had linked the email address of a pending order to the email address of two other orders that Chargebacks911 had already identified as chargebacks. This combination of chargeback data from Chargebacks911 and Kount’s antifraud platform has resulted in significant benefits to Kount customers:
- Reduce fraudulent chargebacks 65% to 95%
- Reduce decline rates by 50% to 60%
- Increase revenues 1% to 6% in the first 30-60 days
Our last segment summarized the benefits of the Kount and Chargebacks911 partnership:
Simple. Comprehensive. Effective. Because e-commerce merchants want to focus on their core business, we’ve made using Kount and Chargebacks911 together as effortless as possible, making it easier for merchants to achieve the following critical benefits:
- Recapture revenue from fraudulently filed disputes
- Resolve errors with accurate feedback
- Reduce chargebacks
- Reduce issuer declines
- Discover the underlying source
- Enhance layered results
- Receive intelligent feedback
- Reverse friendly fraud trends
- Improve overall results
To meet the needs of all merchants, all scenarios, and all budgets, Kount and Chargebacks911 offer 3 solution options:
- Chargeback Retrieval Service. Integrates chargeback data from Chargebacks911 into the Kount platform to provide optimal visibility about chargebacks for every transaction.
- Self-Service Portal. Access to the Chargebacks911 portal for easy optimization of chargeback management, including greater insight with benchmark reporting and other tools.
- Fully-Managed Service. Fully-integrated option that features end-to-end management of chargebacks by Chargebacks911 that is financially guaranteed.