Disputes and fraud

A dispute occurs when a customer contests a charge to their debit or credit card account, and contacts their bank or credit card company about the charge.

Dispute information is made available to the merchant, this process is called retrieval. The merchant then has the option to represent the charge and win the case. This process is called dispute resolution. If the merchant is unable to represent the charge, the card issuer will typically rescind the sale and add fees on top of it. This process is called a chargeback.

Disputes

A customer might open a dispute case with their card issuer for a variety of reasons, such as:

• Duplicate orders: The customer accidentally placed the same order twice, or was charged twice for the same order.
• Incorrect charge amount: The customer feels they were charged an incorrect amount.
• Service not provided: The customer paid for a service that was not provided.
• Products not as described or defective: The customer received a product that was different from what was described or was defective.
• Fraud: The customer claims they did not make the purchase.

Fraud

There are two types of fraud:

• Friendly fraud: This is usually buyer’s remorse or forgetfulness. For example, a customer decides that they do not need a subscription after buying it, or they forgot they signed up. The customer wants their money back, and they’ve taken measures with their bank to get it. The intention is not malicious.
• Criminal fraud: This occurs when someone tries to obtain something for free or seeks your money through deceptive means. Unauthorized transactions are a common form of criminal fraud. The intention is malicious. To protect your business from criminal fraud, see How to prevent fraud.

How to prevent fraud

Rebilly helps protect you from fraud by providing comprehensive fraud protection and also automates the dispute process, manages evidence, saves time, and reduces human error. To prevent fraud, use the following features:

• Transaction risk scoring: Use risk scoring to automatically manage the level of risk that is associated with each transaction, and to automate specific actions based on that level of risk. A common use case for risk scoring is to add a customer to a blocklist and to stop the transaction.
• Enhanced Due Diligence (EDD): Use EDD to confirm customer-provided information against public sources for multiple risk factors such as arrest, fraud, bankruptcy, and occupation information. This feature provides search logs of every automatic check.
• 3D Secure (3DS): 3DS is an authentication method used by merchants to validate cardholders. The cardholder authenticates their card against the issuing bank's website. The merchant chooses whether to use 3D secure. This enables the merchant to shift liability from themselves to the issuing bank. 3DS requires cardholder interaction.
• Device fingerprinting: A device fingerprint is a unique identifier for a device. It is generated from specific device characteristics, such as: operating system, browser, and IP address. Device fingerprints are used to identify devices and prevent fraud.
• Blocklists: Use blocklists to prevent fraud and criminal activity. Blocklists are lists of customer attribute values that are blocked from buying from you. For example, if a customer attempts to make a purchase from you with a credit card or fingerprint that is in a blocklist, the transaction is blocked and will not be processed.

Rebilly also provides a Know Your Customer (KYC) and Anti-Money laundering (AML) add-on to help you comply with regulations and prevent fraud.