Preventing Fraud During and Beyond COVID-19

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Preventing Fraud During and Beyond COVID-19

Predictability in any area of our lives is welcome right now, but COVID-19 is proving to be anything but predictable. Through all this uncertainty, e-commerce businesses are experiencing an unprecedented boom, with many reporting holiday-level sales as the new normal. That’s a good thing, but online retailers need to watch out for a corresponding rise in fraud as well. Here’s what you need to know. 


Trends related to COVID-19 

Spending in travel and entertainment is in freefall, and spending on groceries is significantly up. Google searches for contactless, free delivery and buy-online pick-up-in-store (BOPIS) have increased. This is good for e-commerce businesses, but a surge in online spending is a double-edged sword—you’re making more money, but it’s more difficult to catch fraudsters. And, as spending habits shift, how can you be sure transactions are caused by a changing economy and not fraudulent? 


The new world of online fraud 

Fraud detection models are often based on matching billing and shipping addresses or detecting odd purchasing patterns. That doesn’t work in the world of COVID-19. People are buying things for others and they’re buying in bulk, both behaviors that, pre-COVID-19, would’ve been held up by fraud filters for manual review. To streamline your operations and reduce friction for end-users, you’ll need to adjust your fraud prevention practices accordingly.  

The first tool available to help prevent fraud is one you already have at your disposal: your intuition. If you’re reviewing a transaction you wouldn’t typically approve, ask yourself if the order seems thoughtful. There’s a big difference between someone ordering 10 different items and 10 of the exact same items. Fraudsters don’t put a lot of thought into filling their carts, and often click the first item they see and buy in bulk. Another thing to look out for is the same name or last name—this could indicate a gift or someone sheltering in place at a different address.  

If fraud is a problem for your e-commerce site, consider setting maximum quantity amounts. Many shoppers already have the expectation that they can’t get everything they want at the moment, so this cuts down on fraud without massively inconveniencing your customers. And, as always, be sure to keep immaculate records in case a chargeback is issued despite you doing your due diligence. 


Preventing friendly fraud 

Friendly fraud occurs when a cardholder initiates a chargeback without malicious intent. This most often occurs when the client forgets about making a purchase or doesn’t recognize a charge on their credit card statement. This type of fraud makes up 35.5% of all chargebacks. When preventing friendly fraud, your goal should be to presume positive intent, while still protecting your business. Some common reasons for friendly fraud in the current economic climate include:

• Unusual shipping delays
• Dissatisfaction with a product and an unclear or burdensome return policy
• A seller not being able to fulfill an order 

When working to prevent friendly fraud, communication is key. Consider this from the consumer perspective—would you rather know from the start that your order won’t arrive for two months, or blindly expect an order that, seemingly, may never arrive? Ensure your return policy is clear (this is especially vital for businesses that have a brick-and-mortar storefront currently unable to accept returns), notify customers of any delays, and be flexible. It’s better to offer accommodations or refunds than it is to face a chargeback, especially considering most disputes are accompanied by a fee of around $25.  

It’s also important to know that the card associations have taken steps to protect merchants like yourself from COVID-19-related friendly fraud. For example, the card associations have stated they will side with merchants that are unable to fulfill an order due to a government mandate. Click here for full details on those measures.  


Final thoughts 

COVID-19 has taught us a few important business lessons. We’ve learned to streamline operations, reduce expenses, and businesses that have furloughed or laid off employees have had an opportunity to reassess workloads and processes. This crisis has shown us that every order is important, communication is vital, and flexibility is invaluable. 

Looking for more insight to protect your business? Read Your Guide to Chargebacks and How to Shield Your Business from Them. Having difficulty with chargebacks or paying too much for payment processing? We can help with that too. Just fill out the form below or call us at (800) 386-0711 to learn more.   


BASYS Processing as a business partner

Does your current processor understand the unique struggles of your industry? Do they provide great rates and excellent customer service? Are they offering solutions to grow your business and being pro-active about helping you reduce risk and increase your savings? Contact BASYS today to learn more about innovative payment solutions that will save you time and money. We make accepting debit cards and credit cards convenient, safe & affordable.

BASYS Processing features:

–  Live operator when you call support – no automated voice systems
–  Dedicated Relationship Manager for questions and concerns
–  Quick response time for your questions and concerns; you are a priority
–  Family-owned since our founding in 2002
–  A+ BBB rating
–  90% + Customer Retention Rate
–  Proactive contact with every merchant to walk through the annual PCI process
–  In-house PCI Team to assist with questions and concerns
–  Solutions including terminals, virtual terminals, e-commerce, mobile, and point of sale
–  EMV compliant products
–  Reporting for customer, sales, and inventory management
–  Gift and loyalty card programs
–  Easy-to-read statements
–  Transparent pricing
–  Tremendous savings


About BASYS Processing

BASYS Processing provides credit card and debit card processing services, and solutions that include terminals, virtual terminals, e-commerce, mobile, and point-of-sale, customized to fit any need.  Banksassociations, and software partners depend on us to strengthen their reputations and relationships with their customers by providing remarkable service paired with ultimate flexibility and pricing. Merchants depend on us to make accepting credit cards and debit cards convenient, safe & affordable. BASYS was founded in 2002 on one philosophy: to take care of our merchants, partners, and employees so they never want to leave. We are dedicated to working one-on-one with our customers to design the perfect solution. BASYS is Personalized Payment Processing.

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