How to protect against consignment shop chargebacks

March 8, 2019

This post was guest authored by Timmy Nafso, Executive Vice President of FortisPay

A thorough look at the chargeback process

Protecting your consignment shop means more than a lock on the door. Now, it’s essential to protect against fraudulent credit card transactions too. A 2018 article stated, “the true financial impact of chargebacks stands at more than $150 billion every year.” Learn how you can guard against consignment shop chargebacks.

What is a consignment shop chargeback?

A chargeback is a transaction that has been disputed and returned by the cardholder/issuing bank. It reverses a credit card transaction and withdraws funds that were previously deposited into the consignment shop’s bank account. The issuing bank reviews the disputed transaction and settles either in favor of the cardholder or the merchant.

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Types of chargebacks

The two main types of chargebacks are fraud and processing error.

Two types of Fraud:

  1. Friendly Fraud  “Friendly” fraud refers to consumers who use the chargeback process to secure a refund or obtain an item for free. Often, customers dispute a transaction with the bank instead of contacting the consignment shop for a refund. The customer claims the products were not as described. According to them, they never intended to purchase them, or the original transaction was never authorized. In reality, these are usually false claims to cheat the system.
  2. True-Criminal Fraud This type of fraud involves a person or party stealing someone else’s personal information. Data breaches, card skimming and account takeovers are all methods used by thieves to get their hands on card information.

Processing Error:

When customers never receive their purchase or the merchandise arrives damaged, it’s considered a processing error chargeback. In addition, errors can occur with duplicate processing or when recurring charges were undisclosed. As a result, the customer revokes their payment.

Chargeback Mitigation Team vs. Traditional Chargeback Department

A traditional Chargeback Department processes paperwork while a Chargeback Mitigation Team provides payment education, compliance assistance, and preventative security. Fortis recognizes the frustration consignment shops experience managing chargebacks and the ever-growing risk for fraud. Our team conducts a four-part training/improvement program, specifically targeting your vulnerable areas. We prevent risk by proactively monitoring and fighting for you. Fortis guarantees merchants will win more chargebacks with our team on your side. No other payment processor currently offers this incredible value-added service.

Fortis Payments has created a free comprehensive Guide to Chargeback Protection for retailers. To download, please click the button below!

Fortis Chargeback Guide



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