New report shows half of chargebacks go unanswered by merchants

Chargebacks are a big part of the online payment industry. Preventing and disputing them appropriately not only will help with bringing funds back into your business, but can also help with bringing down overall chargeback ratios.

With the importance and attention that chargebacks are given, a new report shows some worrying numbers. According to SecureBuy’s “SecureBuy Magento 2013 Fraud Report”, half of all global chargeback dispute requests are going unanswered by merchants.

The survey, taken by 378 merchants who use the Magento platform, showed that 54% of global chargeback and retrieval requests go unanswered, resulting in millions of dollars lost to friendly fraud each year. The report shows that merchants are taking precautions on preventing fraud, with 40% of all merchants surveyed stating that they implement a manual review process for suspicious transactions. A further encouraging statistic was that 68% of merchants perform a pre-fraud screening prior to payment gateway authorization. With a relatively high percentage of online merchants who try to prevent fraud, how is it possible that almost half of all incoming chargebacks are going untouched?

According to Chargebacks911 co-founder, Monica Eaton-Cardone, the reason for these numbers is not surprising. She states that online merchants are “living in fear” from incoming chargebacks, and due to the time, cost and the cardholder favoritism from the card issuers, they choose to simply leave them as is, assuming very little can be done.

Excessive chargebacks can cripple an online business. When a card company notices a merchant with excessive chargebacks, besides the high fees and sometimes incredible fines, they put them under monitoring programs, and can eventually choose to not allow said merchant to support their card anymore.

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