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How to Avoid Chargebacks and Identify Good Customers

Before coming to Whitepages, I was an eCommerce manager at a small electronics recycler in Seattle called InterConnection. We sold exclusively to non-profit organizations and low-income families. In my first 6 months, we had zero fraud because of the verification steps we applied upfront on the person or business making the purchase.

Eventually, we opened an online store—opening the business to any customer. As you imagine, I started seeing chargebacks—lots of them. I was frustrated and my finance department was upset; I needed to find a solution. I started manually reviewing every transaction, which included calling the customer.

I didn’t have good tools. We were using Authorize.Net and Magento, which don’t have strong fraud capabilities. Eventually, I found Whitepages Pro. My manual review efforts became much more efficient and I could re-focus on growing the business.

When I came to work for Whitepages, I was able to dive deeper into the world of risk management and learn about all of the things that happen on the merchant’s side when a transaction is submitted.

Gartner advocates a layered approach to fraud prevention. These four layers are:

  1. Endpoint: what type of device is a customer using
  2. Behavior: how is the user interacting with your site
  3. Identity assessment: Is the person who they say they are—this is where Whitepages fits in
  4. Link analysis: how is the credit card, email, phone, etc. on one order connected to other orders

Ultimately, you need all four layers to have an effective risk management strategy that doesn’t decline good customers.

When a consumer places an order on a website, most of the time they have no idea all of this is happening in the background. It’s important that merchants protect their bottom line by avoiding chargebacks, but not at the cost of rejecting good customers. If a good customer is rejected, they’ll most likely buy from your competition and not return to your site—potentially losing the lifetime value of that customer. Learn from my early mishaps and apply a layered approach to your online transaction flow.

To improve your order review process, identify chargebacks, and reduce good customer friction, check out some common transaction risk signals.

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