Navigating Chargebacks and Friendly Fraud

[A_Whidby]

How can I safeguard my Shopify store against post-delivery chargebacks from customers who've received their orders but still file claims, and what tools, apps, or strategies are effective in combating this form of friendly fraud?

[AK81]

I avoid taking risks and decline medium- and high-risk orders to prevent chargebacks.

[A_Whidby]

Thank you for responding! Indeed, all medium-high risk fraud orders get canceled automatically. My query is more focused on potential apps that could alert you before an order turns into a chargeback. I came across something about this on Facebook, but I haven't been able to find detailed information on it.

[teekay05]

this is the most logical way to safeguard yourself. i've been a victim of chargeback attacks recently (3 times in Sept 24), and then suddenly a wave of "chargeback management" advertisements started to appear everywhere. My suspicion is something sinister in the works with these service providers being the ones creating these attacks to create a demand for these management apps.

Shopify risk identification didn't work for all the chargebacks I had, with PayPal being used as the payment gateway. PayPal sucks @$$ when it comes to chargeback as they do jack**bleep** and only side with 'buyers' regardless of whatever proof that you can provide. PayPal has **bleep** "know your customer" policies allowing these to spread. While my local payment gateway service provider has stricter "know your customer" rules to prevent these from happening in the first place.

sadly, here's another victim of chargebacks https://community.shopify.com/c/shopify-discussions/chargeback/m-p/2721553

found a few more incidents here https://community.shopify.com/c/payments-shipping-and/how-to-handle-high-risk-orders-leading-to-nume...

and another one https://community.shopify.com/c/payments-shipping-and/how-can-i-prevent-fraudulent-chargebacks-in-my...

with service providers providing sales pitches too. sus!

[powercoat]

How do you decline medium and high risk orders? Is there a box we can check to enable this? 

[dylanpierce]

Merchants we work with have success requiring additional verification from the customer for large risky purchases.

The customer gets the signal that the merchant is serious about friendly fraud, and the merchant also has another piece of evidence to use in the event of a chargeback dispute.

But we find that just asking for additional verification upfront is an effective deterrent for friendly fraud, which seems to be a crime of opportunity.

[A_Whidby]

Absolutely, proactive verification measures can be a game-changer! It's fantastic to hear that this approach not only deters friendly fraud but also offers added evidence in case of a dispute. Prevention really is key, and it's great that a simple step like requesting additional verification upfront can make such a significant impact in safeguarding against potential issues. Great Recommendation!

[Buntiform]

Like someone else mentioned, avoid the high-risk orders like the plague and you should be good to go (in most cases). You may also want to consider using a plug-in like IPQS if you’re facing a large volume of chargebacks (that are fraudulent).

[A_Whidby]

Solid advice! Steering clear of high-risk orders can definitely minimize potential issues. And leveraging tools like IPQS for handling fraudulent chargebacks sounds like a smart move for efficiently managing larger volumes. Thanks for the tip!

[Chargeflow-Avia · Accepted solution]

Great question! you should defiantly check out the Shopify fraud recommended apps for 2024: https://apps.shopify.com/categories/store-management-privacy-and-security-fraud the first one handles chargebacks 😉

[AeroForceTodd]

What I don't get is why the banks approve the charge backs when all evidence indicates fraud.  Tracking and delivery confirmation confirms delivery of supposed "undelivered" item.  Banks are just enablers at this point.  Is it too much bother for them to actually look over the evidence?  

[FBaragar]

I don't understand this either! I recently submitted a chargeback response which included a photograph of the delivered order and an email from the customer in question which stated that the chargeback was erroneous. What more proof do we need to get these decisions to go in our favour?!

[Hobbyhorsegirl]

Same!! Why is Shopify or the banks not for us - the merchants?! We shouldn’t get our money taken away if we did everything on our end right! 

[thelondonfctry]

its consumer protection laws in the US... and the banks/credit card companies make a TON of money from interest/fees/card yearly fees to their clients these consumers (remember it's their bank who is reviewing their chargeback -- not even a 3rd party) so the system is all about consumer protection ( i have another business that serves b2b and they are still treated as consumers when doing a chargeback) makes NO sense at all

and at this point they are definitly just supporting consumer fraud and its hurting merchants in the tune to Billions

if only we could all team up as merchants and take some legal action (for eg, chargebacks should be reviewed by a 3rd party company and not the consumers/client bank ? makes no sense) 

[AeroForceTodd]

I’d be willing to do whatever it takes but this could also be easily resolved if Shopify would act responsibly with their customers.  I’ve recently started using shop pay based on their recommendation and immediately had another fraudulent “friendly fraud chargeback” that Shopify protect failed to honor their protection because the thief claimed non- delivery .  This is despite me providing indisputable proof - tracking and receipts-  that the buyer received his product.  This is a green light for all thieves to continue this since all they have to do is claim non delivery and Shopify protect will bail on you.