Preventing Chargeback Fraud

[DandelionBoston]

Has anyone come up with a good way to combat Chargeback Fraud/Disputes? I’m a massage therapist and clients book and pay for services in advance through my online booking system. They choose the date and time of the appointment and prepay with a credit card; they receive their service at the time they specified and leave. The whole system is completely efficient and contactless. However, every once in a while someone abuses the system and initiates a chargeback on their credit card, saying that they knew nothing about the charge. In my case, unless I’ve had a text exchange with them for some reason, I cannot prove to the bank that they were aware of the charge and received the service.

What can I do to protect myself in the event of an unethical dispute?

[TheRealChipA]

Hello @DandelionBoston.

Before I offer a few suggestions, I want to emphasize something.  There is no way to 100% protect ourselves from unethical disputes or fraud.  At least, there is no way short of refusing to accept cards at all.  It doesn’t help that disputes are always arbitrated by the cardholder’s issuing bank, and that they tend to make decisions that keep their customers happy, not that are right all the time.  Fraud and chargebacks are just part of doing business anymore.

Having said that, Square has something called Risk Manager that could reduce this a lot for you. 

Risk Manager is a tool designed to help manage online payments that may pose a fraud risk. Key features include:

• Rule Creation: Set rules to decline payments, trigger alerts, or invoke 3D Secure based on specific conditions.
• Fraud Monitoring: Free for businesses processing payments with Square, but only for online transactions.
• Risk Evaluations: Provides insights into the risk level of transactions, helping sellers make informed decisions.
• Allow and Block Lists: Control which payment cards can be processed.

For more details, visit the article: Set up Square Risk Manager.

One of the big features of Risk Manager is something called 3D Secure.  When it is triggered, it forces further authorization to ensure that the customer using a card is authorized to do so.  It can even, in some cases, guarantee your transaction in the event of a dispute.  I’d recommend thoroughly reading the documentation at the link above, INCLUDING following all of the other links, and watching the videos.