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You sell a thing, you make the money. And, oh look, now you don’t have the money because the bank took it back. Chargebacks are the worst, especially if you’re a small business. But, it’s important to understand that not all chargebacks are a result of stolen card fraud. Most of the time, the customer is confused or is having issues with customer service.

There’s 3 types of card fraud:

Friendly Fraud

The customer’s card is not stolen, and there is no malicious intent. The customer might call their bank to cancel a charge because forget they made a purchase, don’t recognize a business name on their statement, or didn’t receive a package.

Chargeback Fraud

This type of fraud is sometimes confused with friendly fraud, but it’s definitely not friendly. Like friendly fraud, the customer’s credit card is not stolen. Unlike friendly fraud, the customer reports unauthorized charges, a package was not delivered, or that their card was stolen, so they can keep your merchandise and get a refund (turns out the customer is not always right, amirite?).

Stolen Card Fraud

Stolen card fraud is when someone steals a credit card or credit card information and uses it to make unauthorized purchases (when did I buy a unicorn head wall mount?) either in-person, via telephone, or online.

Ever wonder why card-not-present transactions (telephone, virtual terminals, online ordering) typically have a higher interchange fee? These transactions are considered riskier because they have a higher likelihood of fraud, but, thankfully, the benefits of card-not-present transactions largely outweighs their risk.

Here are some ways to reduce your exposure to chargebacks:

1. Figure out the main reason for your business’ chargebacks.

What type of chargeback do you see the most and why? Answering this question can help you understand the changes you can make to your business. For example, if you’re getting chargebacks for undelivered goods, you may consider using tracked shipping.

2. Make your payment descriptor an identifiable business name.

If customers do not recognize your business name as it appears on their credit card statement, they may report fraudulent activity. Make sure your customers can identify your business and consider putting your phone number in the descriptor so they can contact you if they have questions.

3. Request additional information if you suspect something.

If you suspect card fraud in-store, ask to see some identification to confirm the customer's identity, or ask them to use a different card.

4. Make sure your customer service is easy to reach and social media savvy.

Good customer service helps reduce chargebacks if you have unsatisfied customers or undelivered or damaged products. Make sure your team responds to complaints and concerns as soon as possible via telephone, email, Google Reviews, and on social media platforms.

5. Make sure your eCommerce shop has detailed product descriptions.

Reduce customer dissatisfaction by writing clear and detailed product descriptions. This way, your customers can get all the info they need before they buy. Additionally, if the customer tries to file a chargeback in the future, you will be able to provide proof that your product was advertised accurately.

6. Use product videos.

Showing the customer some videos helps them understand the size, quality, and features of your product. Providing video demonstrations of the product has been shown to reduce ‘product not as described’ chargebacks and returns by .

7. Use anti-fraud tools on card-not-present transactions.

Make sure you’re using anti-fraud tools on your eCommerce and telephone transactions. An address verification system ensures that the billing address and shipping address match, and requiring the CVV (3 digit code) confirms that the card is with the customer.

8. Track shipping and ask for a signature.

Let your customers track their deliveries and sign for expensive items. They’ll never have to wonder if a delivery was lost in the mail or is sitting in a warehouse waiting to be sent. Plus, if a customer claims that they did not receive the package, you can use this as evidence to dispute a chargeback.

9. Have a clear return and refund policy.

Make sure your customers understand the return process and any products exempt from return. Post this policy everywhere. Post it on your website, instore, and on the back of your receipts.

10. Check your cancellation process.

If you run a subscription-based business, your cancellation process needs to be seamless and glitch-free. If your customers try to cancel a service, but keeping getting billed for it, you might get a chargeback.

11. Look out for a series of declined orders at the same address.

If a bunch of transactions are being declined at the same shipping address, it’s probably not a good sign. Someone might be trying multiple cards to see if any of them work.

12. Be PCI compliant.

What is ? It’s basically the golden rules for protecting your business and customers from card information theft, and it’ll give you some protection in the event of a data breach.

13. If it’s a repeat customer, is the transaction size out of the ordinary?

Is your regular customer suddenly ordering way more than usual? If you suspect fraud, it doesn’t hurt to follow-up with your customer to verify the order before proceeding.

14. Check that the shipping and billing addresses match.

Although the billing and shipping address may not match in all situations, it is usually a good indication that the purchaser is the card holder.

15. Avoid manual entry.

Manually entering transaction amounts and card numbers could result in human error, and a possible chargeback. If possible, avoid doing things manually, and exercise extra care.