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The Ever-rising Customer Expectations Are Creating an Environment for Fraud and Losses

Buying and selling services online comes with several benefits to both retailers and consumers. E-commerce is fast, hassle-free, and more money-spinning.

People can subscribe to services or shop at any time, from anywhere using their pocket devices. And more upgrades like same-day shipping, IoT-integrated devices, and many more, the consumer, like the merchant, must make an effort to familiarize with the transformations.

But as the merchant is doing double duty to streamline the customer experience (also known as CX) throughout the purchasing process, they meet a lot of challenges. For instance, the speed and ease of making purchases over the internet have spawned a culture of instant gratification.

So a customer begins to expect a frictionless experience from the moment they visit your website, pick a product or service, to when they’ll make payments and receive their product or service. The struggle to bridge the gap between customers and retailers has not led to many challenges but also triggered the growth of the industry into a billion-dollar sector.

The Downsides of a Smooth CX

Everybody loves to think of convenience from a positive angle. Of course, a frictionless process lightens work for both parties, but how could convenience affect the industry negatively?

Online fraud is a sticking point. Yet the ever-rising anticipation for convenience has led brands and shoppers to rank convenience over official business or duties. In the meantime, cybercriminals use increasingly complex methods to rip off consumers, constantly adapting to stay ahead of fraud detection tools.

Putting identity fraud on a spotlight for instance, the count of American victims went up by 8 percent in 2017, reaching an entire 16.7 million people, as per Javelin’s 2018 Identity Fraud Report. Criminals can use phishing techniques to steal consumer data, yet the consumers are not drilled to perform official duties like protecting their personal data.

Naturally, customers have some resort in the event of fraud- they can file a chargeback – a strained form of reversing petitioned payment. Chargebacks authorize the cardholder’s issuer (a bank) to draw funds from a transaction ruled as fraudulent- which causes more trouble instead of fixing the issue.

Merchants are On the Losing End

When consumers are not proactive with their online accounts and personal data security, they fail to perform due diligence. But because they’ve been made to believe in convenience, they can avoid the liability and throw it all to the merchant.

The lack of financial accountability has programmed customer to believe they deserve a refund in the event of fraud. And this blend of circumstances has increased the prevalence of “friendly fraud.” Friendly fraud is a type of chargeback abuse performed by card-holding shoppers. The customer buys an item to later deny the transaction and files a chargeback even if they can’t back their claims with tangible proof.

In the end, the shopper gets an item without paying for it- meaning the retailer incurs a significant loss- the product and sales revenue.

In conclusion

There is an apparent unfairness in the chargeback system as it stands. Letting all the burden fall on the retailers regardless of the shopper’s carelessness is no fair way to treat merchants trying to make ends meet.

The chase towards better CX with strategies like chargebacks has passed the point of consumer protection to now offered an easy way for phony buyers to execute friendly fraud.


Author Bio: Electronic payments expert Blair Thomas is the co-founder of high risk payment processing company eMerchantBroker. He’s just as passionate about high risk merchant accounts as he is with traveling and spending time with his dog Cooper.

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