Chargebacks

Customer Success as Fraud Prevention

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One of the trickier things about trying to provide a great customer experience is that customers and fraudsters tend to like the same things—no-hassle return policies, for example, or seamless payment options. Trying to find the right balance between being customer-friendly and being secure can be difficult, but these goals aren’t always opposed to each other.

Many potential disputes can be avoided by putting in the extra effort to ensure that your interactions with your customers result in successful outcomes. How can an increased focus on customer success help merchants with fraud prevention and chargeback reduction?

  1. What is Customer Success?
  2. How Can Customer Success Prevent Fraud and Chargebacks?
  3. Conclusion

When consumers shop at their favorite ecommerce stores, they want a smooth, enjoyable experience. 

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Most merchants would be happy to provide that, but they also want to protect themselves from fraudsters—and some of the techniques that are good for screening out fraudsters can interrupt and annoy your normal customers.

In theory, consumers appreciate it when security precautions are being taken on their behalf, but they’ve also been conditioned to expect speed and convenience.

When they experience too much friction while shopping at your store, there’s a good chance they’ll abandon their cart and go elsewhere.

The safest anti-fraud solutions for merchants to use are ones that run in the background and use artificial intelligence and machine learning to analyze transactions for fraud indicators in real time. Customers who don’t show any signs of being fraudsters can proceed to checkout unbothered, but suspicious customers might be challenged to re-enter their login credentials or validate their identity through multi-factor authentication.

These automated solutions can help you screen out credit card fraud with minimal friction, but they don’t go far enough—for one thing, they don’t do anything to prevent friendly fraud. However, by staying in the mindset of putting customers first and helping them find satisfactory resolutions to any question, issue, or complaint that they approach you with, you can proactively prevent fraud of all types and avoid many of the scenarios that commonly lead to customer disputes.

What is Customer Success?

Customer success is the practice of anticipating the questions and difficulties your customers might have and coming up with the best ways to address them. The goal of customer success is to increase customer satisfaction and loyalty, leading to higher retention rates, stronger brand reputation, and greater revenue.

Acquiring a new customer costs merchants five times more than it does to hold on to an existing customer. Even before you take fraud and disputes into account, it’s good for your bottom line to implement an organization-wide customer success strategy. It’s important to remember that while customer success has considerable overlap with customer service and support, they aren’t identical things. Customer success is all about being proactive to ensure the best outcomes, not just responding to inquiries as they come in.

How Can Customer Success Prevent Fraud and Chargebacks?

The customer experience is also part of customer success, and true success in this context means balancing the features and conveniences that the customers is hoping to see with the fraud defenses and other security measures that are needed to keep both merchant and customer safe from cyberattacks.

The more your fraud detection procedures can take place invisibly, in the background, the less likely they are to spoil anyone’s customer experience.

The good news is that fraud prevention tools have been headed strongly in this direction, aided by state-of-the-art technology that uses AI and machine learning to evaluate thousands of data points within a matter of seconds, while the transaction is taking place, and making an immediate determination as to whether the transaction is likely safe, likely fraud, or ambiguous enough to need manual review.

Historical customer data can be a huge factor in making these determinations. A repeat customer with no history of disputes or unreasonable complaints, whose personal information remains consistent over time, is going to be a very low risk for true fraud or friendly fraud.

By keeping relevant customer data, you can treat your most loyal shoppers to seamless checkout experiences instead of making them feel like anonymous strangers who require a virtual pat-down.

When you do have to make customers go through additional authentication steps, you can minimize the friction by offering device-based methods, which are usually more convenient (and more secure) than knowledge-based methods.

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Customer success is particularly important in the fight against friendly fraud chargebacks. Many cardholders file these chargebacks because they didn’t get the resolution they wanted from the merchant, or because they never got a timely response from customer service.

All chargebacks of this type can be avoided if your customer service team is reachable 24/7, quick to respond, and empowered to work constructively with the customer to find a resolution that makes them happy. Usually, this happy resolution will involve a refund, but keep in mind that a refund is always less costly and less harmful to your business than a chargeback.

Conclusion

Fraud prevention doesn’t have to be all about seeing every customer as a potential fraudster. It can also be about embracing the customers you can trust—rewarding verified, loyal customers with seamless experiences and convenient features that might be too risky to offer to new, unverified accounts. This can also help to mitigate the friction from security measures that should be applied across the board, such as strong password requirements.

Merchants have to prepare an adequate response to the threats they face, but a customer success strategy can help you find the right balance between fraud prevention and the overall customer experience.

Customer success is also essential as a guiding principle for your customer service team, who hold the front lines when it comes to dealing with disputes related to shipping, product quality, and other subjective issues. If your customers aren’t satisfied with your customer service efforts, they’ll let you know by turning to their banks for a chargeback instead. When you make customer success your priority, many of the frustrations and miscommunications that lead to chargebacks will never happen in the first place.

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