Chargeback Fraud Prevention for eCommerce
Block fraud and reduce chargebacks with real-time risk checks
Deploy powerful, passive identity and device risk checks to cut chargebacks, losses, and fraud abuse while supporting a seamless shopping experience for trustworthy customers.
Overview
eCommerce businesses face a variety of fraud challenges that pose serious threats to their revenue and reputation.
For one, chargebacks not only incur significant losses, but also strain relationships with critical payment networks.
Promo and loyalty abuse drains resources and devalues customer rewards programs.
Account takeover attacks put sensitive data at risk and degrade consumer trust.
And that’s just the beginning.
Opportunity
To prevent chargebacks and other fraud abuse, it’s critical to understand the risk associated with the user inputs and credentials, as well as device and behavioral patterns at play. By assessing PII risk, name-to-PII correlation, layered with device, IP, and behavioral signals, you can get a clear picture of the person behind the transaction and block bad actors before they have an opportunity to strike.
Boost your fraud strategy with industry-leading data coverage, fraud capture, and false positive rates.
80% overall phone verification
91% overall address verification
68% email fraud capture in riskiest 5% of users
HOW WE HELP
Instantly spot unusual device and behavioral activity
- Get insights on the customer’s device, internet connection, and location to identify risk before risky transaction can occur
- Identify high-risk behaviors, like the use of VPNs or anonymizing tools to block fraud
- Compare historical behavioral patterns with the current session to pinpoint deviations from trusted user patterns and take action on potential threats
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Thoroughly assess risk and ownership of a phone, email, or address
- Understand the risk associated with key customer inputs, such as phone number, email address, and shipping address, to determine their legitimacy and minimize the risk of fraud
- Assess ownership of a phone, email, or address to swiftly spot account takeover attempts or promotion abuse
- Ensure trust beyond signup to include ongoing interactions such as profile updates, transactions, and authentication events
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Phone RiskScore to instantly predict risk and verify phone ownership
Email RiskScore to instantly predict risk and verify email ownership
Address RiskScore to instantly predict the risk connected with physical addresses
Simplify deployment with a single platform
- Consolidate systems by managing payment fraud, identity, and device risk strategies through a simple drag-and-drop workflow builder
- Generate alerts and cases in real-time to identify bad accounts and block future transactions
- Connect signals between sign up and point-in-time login or transaction events to accurately assess risk across every customer interaction
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RiskOS® AI-powered decisioning platform for any identity, fraud, risk, or compliance challenge
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Business onboarding
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Trust & safety
Keep your community safe and thriving with instant, accurate user verification.
Login & authentication
Deliver frictionless authentication at onboarding, login, multi-factor authentication, high-risk transactions, and account recovery.
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Bank account verification
Convert more users with comprehensive account coverage while effectively stopping fraud and return payments.
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FAQ
What is chargeback fraud in eCommerce?
Chargeback fraud, or friendly fraud involves customers falsely claiming that legitimate purchases were unauthorized or that they never received goods. Their card issuer responds to the claim by providing a provisional refund to the customer and investigating the case. Often, banks will give the benefit of the doubt to customers, leaving eCommerce merchants to bear the cost of these fraudulent claims.
While the chargeback system is intended to protect online shoppers, bad actors have become adept at exploiting this process, getting their money back while keeping merchandise or securing access to services. This type of fraud is particularly challenging to fight since proving customer receipt or authorization in the digital space is extremely difficult, and traditional, third-party fraud prevention methods don’t apply.
What are the consequences of not reducing chargeback fraud?
Failure to effectively stop chargeback fraud has severe financial and reputational effects on online retailers beyond lost merchandise and revenue, as card issuers charge fees of $20 to $100 per case.
For high-volume merchants or e-commerce sites, these penalties can add up quickly and make a significant impact on your bottom line. Additionally, manual investigations reduce operational efficiency, leaving staff to spend hours gathering evidence and fighting disputes instead of focusing on higher-value tasks.
What are some common indicators of chargeback fraud?
Savvy eCommerce firms seeking to reduce chargeback fraud should watch for warning signs such as multiple orders to one address using different cards or purchases from high-risk locations. Businesses should continuously monitor customer behavior and transactions to catch suspicious activity and prevent fraud. Other signs of potential chargeback fraud include:
- Multiple, separate orders in quick succession to the same shipping address
- Repeat orders with slight variations in contact details
- Unusually large order quantities that deviate from normal purchasing patterns
- Mismatched billing and shipping address
- Several failed payments before a successful transaction
- IP address location doesn’t match the billing/shipping address
These signs do not guarantee that fraud has occurred but should trigger enhanced security measures to verify the customer’s identity.
What are other fraud challenges eCommerce businesses face?
Beyond chargeback fraud, online retailers face a wide array of threats that can negatively impact revenue, disrupt operations, and harm the customer experience. Organizations must build comprehensive security systems to stop multiple types of fraud attacks and vectors, such as:
- Synthetic Identity Fraud – Fraudsters create fake identities by combining real and fabricated PII to open accounts, make purchases, and commit fraud before disappearing.
- Account Takeover (ATO) Fraud – Attackers gain unauthorized access to legitimate customer accounts using stolen credentials, allowing them to change passwords, update shipping addresses, and make fraudulent purchases.
- New Account Fraud (NAF) – Fraudsters use stolen or synthetic identities to create new accounts and exploit promotions, discounts, or credit lines, especially in BNPL and loyalty programs.
- Loyalty Program & Promo Abuse – Fraudsters create multiple fake accounts to exploit referral bonuses, sign-up incentives, or loyalty rewards, often using automated bots.
- Mule Fraud (Reshipping Schemes) – Fraudsters recruit individuals (mules) to receive and forward stolen goods, making it harder to trace fraudulent transactions.
How does Socure’s platform help identify high-risk behaviors and unusual device activity?
Socure’s Digital Intelligence solution uses a comprehensive, “defense-in-depth” approach that binds granular device data to customer PII, creating rich profiles that enhance identity proofing. This entity profiling, combined with real-time monitoring of device attributes and historical consumer interactions, enables companies to instantly recognize anomalous activity and take action to stop fraud before it can do damage.
Why is Socure the leader in helping eCommerce businesses reduce chargeback fraud?
Traditional fraud prevention tools focus primarily on stopping third-party criminals using pre-defined rules and basic checks such as phone or email verification. When it comes to stopping first-party fraud (like chargeback fraud), these options fall short because the perpetrator is the legitimate cardholder. This means that “friendly” fraudsters can easily pass standard identity verification and account security checks. Socure helps eCommerce businesses minimize chargeback fraud by analyzing millions of accounts and billions of transactions to accurately predict and prevent bad-faith claims before they impact your bottom line. Powered by the world’s largest First-Party Fraud Consortium, Socure gives eCommerce businesses a manipulation risk score, enabling them to instantly assess customer risk at onboarding. Additionally, the solution provides real-time alerts and continuous monitoring to ensure organizations can act quickly to prevent fraud.