Fraud is a nasty reality in Ecommerce and no real good advice online exists as SaaS Fraud Protection is a big money market now; The Game is to Be Sold, Not Told™.

Here’s some advice I was never able to find (mostly regarding pre-arbitrations) and hope it helps other merchants not willing to surrender 1-2% of their revenues for “protection”(more like “insurance” in which there’s a million ways for your claim to be denied). Check these fraud-protection companies’ BBB reviews.

Things I have learned dealing with Ecommerce fraud.

1. Maintain great communication with the customer before, during, ane after the order process. This should come naturally as part of good customer service practice.
2. Utlize existing payment gateway features such as AVS and other included fraud tools.
3. NOTHING beats MANUAL REVIEW OF ORDERS to prevent FRAUD. You know your sales trends, typical orders and your customer behavior better than anyone.
4. Website session recording is a necessity. Lucky Orange is an affordable option for this, and Microsoft Clarity is a great free option but trickier to find the session you need.
5. Make your terms and conditions easily accesible and even ship them with the box.

As economic times get tougher, Ecommerce chagebacks due to friendly fraud in will rise, and with proof of a delivered product, you may likely win your initial dispute in the chargeback.

Sadly, after you, the merchant win a chargeback, it’s just as easy for the disingenious to file a new dispute on the same transaction called “Pre-arbitration” and most payment processors wil advise you to accept these, some may not even let you fight them.

You may be tempted to seek out companies that offer “chargeback protection” for a “measly 1-2%” of your revenues because of this.

In the event of a prearbitration, you can win these yourself as an honest merchant as long as you are prepared to present your claims against them and can prove it.

They’ve leveled their claims against you that will have to be defended in legally binding arbitration shall it continue to such- you can open yourself to risk with this, but in my experience banks don’t seem interested in proceeding to actual arbitration.* You as a merchant have a chance to respond to this. Ask yourself this.

1. What are my claims against a dishonest customer and can I prove it?
2. Have you established good faith in amically to resolve the situation?
3. Can you prove dishonestly or violation of ordering terms?
3. Have they exhibited bad faith such as hostile/no communication, denials of returns or partial refunds per your published policy?
4. Can they defend these claims in a legally binding arbitration?
5. Make all of these claims clear in your response to the pre-arbitration dispute.

We all can’t afford large anti-fraud departments or expensive SaaS to protect ourselves. Honest customer service and persistent vigilance against fraud are not mutally exclusive.

*Not legal advice. Always have a trusted attorney at hand.

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