So, what can merchants operating online do to prepare for the inevitable flood of shoppers, both good and bad?
Refund Fraud
Imagine being thrown in jail for a crime that you didn't commit … without a trial. That's what refund abuse can feel like for online merchants. This type of fraud occurs when a customer bypasses the retailer by going straight to their bank to dispute a purchase. The customer may say that the order never arrived (even when it did) or that their credit card was stolen (when it wasn't). The bank will issue a refund to the customer and deduct the transaction from the merchant, often with an added fee.
This type of fraud is a challenge, since the fraudsters skip the merchant altogether. Often falling under the umbrella of "friendly fraud," the shoppers that commit refund fraud look and act like legitimate customers.