Boost Sales by Reducing your Risk of Fraud
Online retailers know that fraudulent activity has many long-lasting repercussions beyond the immediate financial hit. Certainly fraud is an inherent risk of doing business, even more so in the card-not-present world of eCommerce. But retailers who are hit hardest by fraud also face a more serious financial risk that could have dire consequences for their business – and it all starts with the chargeback.
The merchant is typically out the cost of the product or service and any related distribution costs when a fraudulent transaction happens. This impact is compounded by the bank or processor that assesses fees on the merchant for chargebacks. These fees often increase as more fraudulent activity occurs. If the problem is rampant enough the merchant could lose its ability to accept credit cards altogether – essentially putting them out of business. As we enter the holiday shopping season, minimizing chargebacks becomes even more critical.
Kount, a Magento Gold Industry Partner, specializes in helping merchants reduce fraud. One of Kount’s clients, CD Baby, a large online retailer of independent music, experienced a dramatic impact from chargebacks as they were seeing fraudulent activity from both ends of their business model, artists and affiliates. Artists get paid royalties when their music sells and affiliates get paid commissions when they sell music to a consumer. Cyber criminals were using fake identities, stolen music and stolen credit card information to post music on the site as an artist, and then posing as an affiliate selling music. The sophistication of the fraud made it difficult to detect which resulted in a chargeback rate that was costing too much in time, money and effort from the CD Baby team.
Kount has worked closely with their team to dramatically decrease fraud’s impact on their overall business, not to mention the considerable time their Controller, Christine Barnum, spent on investigating fraudulent transactions each week. Today CD Baby’s chargeback rate is at .07% - considerably below the Merchant Risk Council’s recommended rate of 0.1% and well under the 2.5% CD Baby was experiencing prior to implementing Kount Complete™. Christine also estimates she spends about an hour a week working on fraud-related tasks, a far cry from 40% of her workweek before Kount’s solution was in place. For the in depth story, visit Integrated Solutions for Retailers Online.
While a certain level of fraud comes with the territory of being an online retailer, Kount can help you establish a tolerable threshold for chargebacks so that your business is not crippled by chargeback fees and can maintain a variety of payment options. More importantly, their solution makes it so that fraud does not dictate your future.
Got a story about fraud and chargebacks? Contact Kount for more information here.