Home » Address Verification – Result-Driven Approaches to Combat Chargeback Fraud

Address Verification – Result-Driven Approaches to Combat Chargeback Fraud

by Mark Dylan
address verification services

Chargebacks are used by businesses to provide customers with easy ways to dispute suspicious transactions while safeguarding them from fraud attempts. However, as criminals are using it to claim false refunds, online stores are losing hundreds of thousands of dollars. Instead of directly reaching out to the merchant, fraudsters dispute transactions with their bank by falsely claiming that the product is defective or they did not make the payment. 

Online stores are on the verge of falling prey to criminals and facing a considerable increase in false chargebacks. Therefore, platforms require AI-powered address verification services to differentiate between fraudulent and legit claims. These solutions cross-verify the information customers provide with the one present on credit/debit cards. This blog entails ways e-industries can combat chargeback fraud.  

Address Verification System – Measure to Overcome Fraud Attempts 

Fraudsters are making online businesses lose over $32.39 billion with false chargeback claims as one of the major threats. Legit customers often return products in case they did not place an order. However, in the majority of cases, fraudsters claim false chargebacks to trick address verification systems and reap financial benefits. It further involves the following types;

  • Friendly Fraud

This refers to intentional false chargebacks that actual cardholders claim to keep the order as well as get their money back. Customers report they did not receive the package or it was a wrong order. However, with efficient address verification mechanisms in place, online stores can track the orders while identifying whether the chargeback claim is legitimate or not. 

  • Error from Companies’ Side

As businesses are moving towards complete digitization while providing customers with online transfers, they are also facing several backlashes. For instance, processing a payment twice, charging additional amounts, or confirming deposits under someone else’s name. In turn the legit customer claims for chargeback which can cost businesses a fortune. Therefore, online platforms require online address verification to better assist global clients while mitigating the chances of increasing chargeback claims. 

  • Criminal Threats

Fraudsters often use stolen credit/debit cards to make online payments while escaping verification of address. This helps them steer clear of identification checks. However, in case actual owners find out about suspicious transactions, they file chargeback claims. Therefore, online businesses require robust measures to validate addresses prior to processing payments. 

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Along with huge financial losses, online businesses also face high chances of reputational damages due to false chargebacks. In case the banks or other payment processors see an overwhelming rise in claims, they will limit the monthly volume of the respective merchant. Furthermore, they can also terminate accounts of the vendors and place them on the Terminated Merchant File (TMF). 

Online businesses need to integrate online address verification solutions for validating transactions while ensuring the presence of customers where they claim to be. 

Online Verification of Address – Security Measure for Businesses 

False chargeback claims are dramatically emerging as a complex and high-risk driving problem for online businesses. Where fraud attempts are exposing platforms to losing millions, they are also increasing the chances of reputational downfall. However, with adequate measures to verify the address in place, businesses can overcome false chargeback claims. 

AI-powered verifying address solutions further help industries combat fraud attacks in the following ways;

Automated Payment Verification 

By incorporating online address verification methods, companies can automate their customer onboarding process. These solutions uplift accuracy and authenticity within platforms’ operations and help them overcome false chargeback claims. The address verification system asks customers to upload real-time pictures of their bank statements, utility bills, and other supporting documents to validate their location. 

AI-powered services analyze specific features such as signatures, information, watermarks, holograms, and much more to authenticate the proofs. The system then cross-verifies information customers provide with the one present on documents. It also validates address by cross-verifying name, country, street, and other details. 

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Digital Consent Verification 

AI-powered solutions offer additional layers of accuracy for online businesses while verifying an address. With services such as digital consent verification, platforms can make sure that the legit customers are making a payment. The system asks for a short video where the consumers authenticate transactions by holding their credit/debit cards in their hands. 

Online address verification solutions cross-verify if an imposter is using someone’s credit/debit card while carrying out identification checks. 

End Notes

Due to rapid digitization, online businesses are facing an increase in false chargeback claims. As e-transactions are streamlining the online shopping experience, fraud attempts are exposing platforms to the loss of millions. Therefore, to ensure legit customers are making a transfer, online businesses need to employ address verification solutions. AI-powered services leverage various checks such as geolocation tagging, cross-validation within global registers, and active consent authentication. Hence, online address verification mechanisms help platforms better overcome their blind spots. 

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