Admit it – You looked. You looked at your chargeback rates and noticed a small week over week increase – nothing to fear, just a bit of an upward trend. The fact that you looked before you received some sort of notification is fantastic. And you are right – there is never anything to fear – just prepare. It’s said that “An ounce of prevention is worth a pound of cure” Benjamin Franklin. That ounce of prevention is what we are looking to communicate.
And one of the best preventative measures – that comes with a longer lead time, is Account Reviews. Every merchant has ‘regulars’ – retail, ecommerce, T&E, even resellers. As consumers, we have habits. Anyplace you got a great deal, a nice product, or a welcome feeling is a place you are likely to return to time after time. You may even have created an account with the merchant. Good for you and for that merchant!
When you are a merchant, you collect those accounts as a badge of honor. Many brands report the number of accounts, active accounts, or new accounts as a regular form of business health. These factors are valuable for measuring the strength of a brand but can lead to a sort of blindness as the numbers increase in encouraging ways.
Now back to chargeback season. How is your account base contributing to your dispute increases? I know – feels like a stretch, but is it?
Let’s look at business blindness and chargebacks – as a pairing. Businesses love new accounts and adore active accounts even more. Fraudsters know this and act accordingly through multiple paths:
- Account Takeover – Everyone has a suggestion and many even have tools to help you prevent it. Right now, some disputes may seem incoming against an account you knew to be trustworthy – back in their day. You may choose to take a moment to interrogate your data to identify some accounts which show some signs of account takeover – then look into any new sales since those potential red flags occurred. What red flags, you say?
- Substantive changes such as email, phone number, address, payment data, etc.
- If you have a limit to the number of changes prior to alerts locking accounts, look at accounts falling just under that threshold because fraudsters know – trust me, they know.
- Be sure to count unsuccessful changes as changes – those incomplete or rejected change attempt counts could put an alert over the change count limits you are applying to your Account Takeover prevention logic.
- Now look at any sales generated after those suspicious activities and see what you can do to confirm this is still your good customer behind this account.
- Dormant Account Activation – Many merchants have levels of trust tied to timing. If an account has been online over X days with no chargebacks/refunds, then it is considered a ‘good’ account. Interestingly though, moving these quiet and ‘good’ accounts into an active mode may seem to be great for your stats – but what if they are not ‘good’ at all?
- Multiple accounts crafted from the same or similar IP addresses exactly 90 (120, 180, etc.) days before they started buying during the Holiday Shopping Season?
- Multiple dormant accounts going straight to a single product SKU, not shopping around, and purchasing multiples quickly?
- Multiple dormant accounts shipping to the same address or to a re-shipper’s address?
Not all these sales have turned into chargebacks yet so you may still have time to look into their authenticity. Correlate these accounts to look for similarities or red flags that didn’t quite meet the extreme level of fraud you already watch for.
If you have a fraud prevention tool, you can look at these transactions again and see if those fraud services would have scored them more risky now that some time has passed. Remember those services can only provide value with history so those emails or PANs may have been fine 4 weeks ago when the sale was made but looking at the same data today could result in a different fraud score.
You could even craft a campaign to reach out to those accounts to confirm they are great customers – or not. Especially for Account Takeover issues, check that old email account and the new one (if that’s what they changed) – and confirm that change was legitimate – an email contacting that prior email account again to make sure the new relationship is valid could work. You know your consumers best and each brand should craft the approach best for them and their client base, but the point here is that your company should now deploy whatever your ‘double-check’ logic is – just to be sure those active accounts are both – Active and Accounts.
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Payment Operations Group is a consultancy of Payment Professionals who ran away from home to join the circus. But seriously, if you would like to pursue a Strategy for your processing future or any payment engagement at all, contact information is provided below.
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Payment Operations Group, LLC
Payments…Navigating, Educating, Strengthening.
Christine Wade
Christine@PaymentOperationsGroup.com
1.512.694.9146
Sally Baptiste
Sally@PaymentOperationsGroup.com
1.972.415.3450
www.PaymentOperationsGroup.com