Collaboration is the key to beating fraud without causing friction for customers
For today’s enterprises, “friendly fraud” and illegitimate credit-card chargebacks are a serious problem: at least 40% of businesses lose 1% of their total revenues to bogus chargebacks, and well over half say they see chargeback rates climb year-on-year. Putting systems in place to mitigate these revenue losses can be tough. However, excessive scrutiny of individual transactions can sour customer relationships while collecting data and managing disputes at scale create enormous logistical headaches for internal teams.
To figure out how successful organizations handle these challenges, I headed to Payments MAGnified in Dallas to host a panel with Best Buy execs Jen Renner, Associate Manager for eCommerce Fraud Risk, and Ryan O’Connor, Senior Finance Manager. They had some great insights about the need for cross-team collaboration and strong partnerships to drive effective chargeback mitigation, and I wanted to take this opportunity to share a few of their most important points with a broader audience.
Be proactive, not reactive. A chargeback response is necessarily reactive because it’s inherently a response to a specific thing that’s happened to your business, Renner said. Because of that, though, it’s all the more important to get ahead of the curve in any way you can and find ways to proactively optimize systems and prepare to manage disputes effectively. That, in turn, often involves fostering collaboration. Collecting and analyzing data, for instance, can be a useful way to identify risks or flag unusual customer behavior — but it’s only truly effective if teams know in advance who their findings need to be shared with, and what action needs to be taken across the organization as a result. “We always try to have communication and find those rare points where we can be proactive in our work,” Renner said.
For me, the big takeaway from Payments MAGnified was the realization that even for huge and highly successful companies like Best Buy, chargebacks are a complex and multifaceted problem. No matter how big your organization is or how deep your pockets are, you can’t simply go out and buy an off-the-shelf solution to eliminate chargeback risks. Instead, you need to put in the work, build a strong culture of collaboration across the organization, and team with trusted third-party vendors to build the flexible and effective infrastructure needed to support your company’s evolving needs.
That might sound daunting. But it’s actually good news — because it means that the secret to managing chargebacks effectively isn’t simply scale or resources. There’s no size, in fact, at which it becomes possible to manage chargebacks effectively simply as a function of the size of your organization because the challenges of managing chargebacks grow — perhaps exponentially — along with the complexity and size of your organization.
Instead, for businesses of all sizes, the path to effective chargeback mitigation depends on building systems — cultural, organizational, and technological — that enable more engaged, seamless, and strategic collaboration and decision-making by stakeholders at all levels. Getting that right isn’t easy, of course. But it’s something every organization has the capability to achieve if they’re thoughtful about the way they approach chargeback mitigation, and work creatively and proactively to build out the teams, partnerships, and infrastructure they need to succeed.
About the Author
Roenen Ben Ami is the co-founder and Chief Risk Officer of Justt.ai. Justt is a smart technology solution to the unjust and complex system for resolving credit card payment disputes. You earned it. Now keep it.
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