Every retailer hates online chargebacks, and unusually active chargeback activity is often an indicator of e-commerce fraud.
Risk management firm Chargebacks 911 has identified the U.S. cities in the Northeast where the highest percentage of e-commerce transactions result in a chargeback. Visa and Mastercard have set 1% as acceptable chargeback threshold, and these ZIP codes far exceed that figure.
• 17% chargeback rate: Port Washington, New York (11050)
• 15% chargeback rate: Astoria, New York (11105)
• 13% chargeback rate: Plainview, New York (11803)
• 12% chargeback rate: Danvers, Massachusetts (01923); Carteret, New Jersey (07008); Point Pleasant Beach, New Jersey (08742); East Elmhurst, New York (11370); Massapequa Park, New York (11762); Albany, New York (12203); and Philadelphia (19115)
“Online merchants should pay close attention to transaction disputes as part of their risk management strategy, because high chargeback rates are frequently a sign of retail fraud,” said Monica Eaton-Cardone, co-founder and COO of Chargebacks911. “Beyond losing merchandise and profits, Internet retailers can face additional fees and consequences in relation to chargebacks, particularly if they exceed the 1% threshold set by acquiring banks. Our goal in pinpointing locations with higher-than-average chargeback rates is to allow merchants to perform due diligence on orders originating from or shipping to those cities.”
Among the steps Chargebacks 911 advises for online retailers to help avoid e-commerce fraud include requiring the card verification code, collecting and comparing IP and physical addresses, and using both automated and manual transaction analysis methods.