Dealing with Disputes in the Card-not-present World

Dealing with Disputes in the Card-not-present World

The migration to EMV (Europay, MasterCard and Visa) technologies for authorizing credit and debit card payments in the card present world has created an increase in card-not-present fraud around the world, The percentage of credit and debit cards with EMV chips in them is expected to reach 100% by 2020, and CNP (card-not-present) fraud is expected to cost U.S. retailers and banks close to $7.2 billion annually by that time, as well.

Fraudsters will follow the money, so as e-commerce sales increase, so will CNP (card-not-present) fraud. If you sell products and ship based on a credit card authorization, you are particularly vulnerable if you don't use the AVS (address verification service) and CVV (card security codes) enhanced fraud detection services provided by most payment gateways today. Be sure that you have consulted with your merchant services and gateway providers to insure that these settings are optimized to detect fraudsters that are using stolen card data or operating from a foreign IP address.

Another area of CNP (card-not-present) fraud occurs with businesses that sell a service, or books trips for future delivery. Transactions that may be conducted over the phone don't provide the type of documentation that will protect you in the event of a dispute. Websites can be setup to include click through screens that force a customer to view cancellation/refund policies before payment can be made, but phone reservations/sales require some extra steps to help prevent disputes that will most likely be lost without proper documentation.

If you take credit card data over the phone, you need to protect yourself. A signed invoice that includes a listing of what is being purchased, a credit card authorization and initials that indicate agreement to your cancelation/refund policy will go a long way to helping you avoid the risk losing a dispute on a phone originated purchase. You should never accept credit card data via email, so you may want to consider directing the customer to your website to complete a reservation, or, some firms have setup services like DocuSign to send a customer these documents that can be signed and returned electronically.
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