6 Ways to Protect Your Business from Chargeback Fraud

A chargeback is quite annoying as it reduces the interests you’re supposed to enjoy from your business. It gets the more infuriating when you fight against a charge on your card and win but don’t get the money back. More so, you still get to incur chargeback fees.

There are laws such as the Fair Credit Billing Act (FCBA) of 1974 that protect people from fraud related to chargebacks. In this article, we’ll mention 6 ways that work in preventing chargebacks. Read on below for more information.

6 ways to protect your business from chargeback fraud

  • Use payment protocols with tight security

Payment protocols that are more secure usually have most of the following properties: AVS (address verification services), email verification methods, phone number reverse lookups, and order validation tools. Shopify e-commerce plug-ins are common examples of order validation tools.

Also, many cases of chargeback fraud result from transactions without cards. This is evident in a report, which shows that a large percentage of such complaints happen in CNP (card-not-present) transactions. This means that using cards for transactions can help reduce the cases of chargeback fraud.

  • Keep a record of all your transactions.

When disputing a chargeback, you’ll need evidence to make your claims more validated. You can easily misplace receipts, but that’s not very common with a book of important records. Luckily, your phone can serve as a handy notepad that you can access anywhere.

Also, you can keep pictures of receipts on your phone or Google drive for easy access. The records will also help you to retract your chargeback. Sometimes it could simply be that the customer forgot about the charge. The records will still serve you either way.

  • Put solutions in place to help you fight chargebacks

Sometimes, it is not just enough to have systems in place to help you prevent chargebacks. There are still chances of it happening in the long run. So, it is important to have solutions or strategies to help you fight against them. We recommend employing a payment processor to help you create and manage the solutions.

Some important solutions that can help you manage chargebacks are as follows:

    1. Make early reports so that you can fight the chargeback in time.
    2. Activating real-time merchant alerts that start from the first dispute.
    3. Make all of your data available on a single platform. This increases your efficiency.
  • Use BIN checks

BIN checks provide an increased level of security and make customers feel more confident when making transactions. BIN uses a database that verifies if cards are legitimate, using the first 6 digits of the card’s 16-digit pin. 

It does this irrespective of the kind of card, be it debit, credit, gift, or charge card. If you have any reason to question the authenticity of any order, you can do a bank BIN lookup. This allows you to take necessary measures to protect your business from chargeback fraud.

  • Create a simple billing descriptor

This may sound negligible, but it will go a long way in saving you from the harrowing experience of fighting a chargeback. Create billing descriptors that are precise and contain basic information such as transaction date, the transaction amount, and the merchant descriptor. Also, make sure to keep these records safe if chargeback issues surface.

  • Make your refund policy clear.

You could save yourself from a lot of trouble if you had your refund policy clearly stated before the transactions. This makes it a lot easier to protect your business’s reputation from the scandals associated with chargebacks.

Your refund policy must contain some key information such as restocking fees, exclusions, and time frame allowed in case of returns. More importantly, be specific with your terms and make them easily understandable.


Nobody likes the frustration that comes with a customer coming for chargebacks. Therefore, you must take measures to prevent them. More importantly, you must also have solutions to help you fight them.

Using payment protocols with a trusted level of security is very important – BIN checks are a worthy example. You can also reduce the chances of this happening if your refund policy is on your website or receipts. 

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