Chargeback Prevention: The 6 Benefits & 5 Strategies

Alan May15, 2024

Chargeback Prevention: The 6 Benefits & 5 Strategies  (图1)

The incorrect data could signal fraudulent activity and use the information to reject transactions that might not be authentic.


Blacklisting is a dynamic database based upon customer records that can contain repaid charges, claims, or disputed payments. When integrated with CRM software, customers may order orders from the database. These are ways to alert someone if a previous incident was a fraud case or not. Cancel any potential unauthorized charges by using these tools.

Fraud detection

In most cases, fraud detectors use the identification of the originating user as part of the fraud analysis. You can also detect fraud by authorizing payments before the fraud happens. As chargebacks can be made based on not authorized purchases, this step needs to be performed prior to authorizing payment in order to stop fraud from occurring.

Address verification service (AVS)

Compare the payment address with the account address of the customer. Using the validation procedure you can be notified of suspicious transactions. Furthermore, AVS is required if the dispute involves the major card processor and without this step, the problem of chargeback disputes becomes less likely to be resolved effectively.

Workflow management

The software can run most processes in the background handling chargeback fraud automatically. So time is saved to focus your efforts on what is important – developing great products and selling through e-commerce. Control your system and build it to the flexibility you desire, perfecting the system for charging fraud.


Most major credit card processors now have 3-D security measures available. The PIN allows for the use of a credit card as an added protection and security measure. The MasterCard security code is also branded SecureCode and validated by Visa. Other processors also provide the same additional security.

5 Fundamental Chargeback Prevention Strategies

Sometimes payment disputes become inescapable realities. Those who don’t want to be victims don’t have to. Developing a customized mitigation plan is an essential step in reducing the financial burden of a business that incurs chargeback costs. However, the chargeback prevention effort is inefficient.To have the maximum effect you need to first focus your efforts on eight important areas:

Better Order Communication

Regardless of how much trouble the customer encounters during the fulfillment of a purchase order, the client should keep informed. Consumers understand that problems occur unanticipated. Almost all will appreciate the notification of this immediately. However, it can get easier if shoppers don’t understand why they don’t believe what is happening to them or are frustrated. From checkout to delivery, the closer you are to the customer, the higher the confidence in that client experience. It is necessary to communicate at all important stages of the fulfillment process. Order confirmations must list shipping dates.

Manage recurring payments

Recurring payment business models are beneficial to both merchants and users. Consumers expect changes from one-time purchases to long-term customers.

You need to respond immediately if an inquiry occurs and initiate the communication in the most proactive manner. Recurring billing requires operational transparency. A detailed service agreement should also be available for customers even before a sale is complete. These include automated billing processes, contract lengths, and additional fees (including early termination fees).

Use available prevention tools

Fraud is complex. This technology changes continuously therefore a risk management plan should also have adaptability. The use of various preventive tools has proved helpful for the detection and validation of cardholder fraud. This is an excellent tool for preventing diseases. The Card Network Tool (VUS) is a system that validates the identity validity of a user’s credit card information. The ability to combine both together increases accuracy. A range of chargeback prevention tools can also be obtained. Chargeback alerts can provide notifications about contested activities.

Combat friendly fraud

As mentioned above, friendly frauds cannot be avoided because they cannot be predicted. This list can help prevent some nice fraud charges. But you have other options.

A signature on delivery confirmation may help customers avoid false claims of purchase. Unsigned confirmation alone won’t do the trick, but it’ll be helpful when paired with additional information. Friendly dispute resolution will usually take place by simply completing a customer inquiry or contacting the customer. A chargeback may be filed when a cardholder asks questions on charges.

Eliminate merchant error

It might surprise you if the chargeback is caused by an error in the procedure or some minor mishaps that occurred. Errors can occur by sending incorrect information in an email. Several triggers hidden from routine operations can cause recurring disputes today. Hopefully, you can avoid chargebacks due to Merchant errors. You should analyze your business to find and eliminate chargeback triggers. You have to monitor the daily practice to ensure that the best practice is followed. Likewise, this applies to the shipping, fulfillment, and returns policy.


Chargebacks can be costly for your business and can lead to a decrease in customer satisfaction. However, by implementing the six benefits of chargeback prevention and the five strategies we’ve outlined, you can help keep those costs down while maintaining happy customers.

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