| Internet Merchants Face Rising Credit Card Fraud and Chargeback Fees |
| Good Customer Service Keeps Chargeback Fees Down |
| Stamford, Conn. -- June 28, 1999 -- A new report from Gartner Group, Inc. (NYSE: IT) provides advice for online merchants on reducing credit card fraud and chargeback fees. According to GartnerGroup research, the average chargeback rate to merchants for credit card transactions on the Internet is about 15 percent, and can soar as high as 30 percent for merchants delivering digital products immediately at the time of purchase. This compares with 1 percent for point-of-sale transactions. |
| The GartnerGroup report, "Limiting Credit Card Fraud and Chargebacks on the Internet," states that credit cards dominate as the electronic payment method of choice for online shoppers, even though the use of E-checks and debit cards offers better user verification. |
| "Merchants that do not address the potential growth in costs associated with Internet fraud and chargebacks will face losses that will threaten the viability of their E-business," observes GartnerGroup analyst Ken Kerr. "While a fraud detection system is essential for accurate credit card verification, a high number of chargebacks on Internet purchases are the result of customer disputes, not fraud." |
To limit customer disputes, merchants should:
- Provide in-depth descriptions of sale items;
- Deliver goods promptly;
- Fully disclose all charges, including taxes and shipping costs;
- Provide customer service contact information.
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| The report also identifies several fraud detection methods, including address verification services, rules-based screening services, card verification methods and digital certificate systems. |
About GartnerGroup
As the world's leading authority on information technology (IT), GartnerGroup provides clients with a wide range of products and services in the areas of IT advisory services, measurement, research, decision support, analysis, consulting and training. Founded in 1979, with headquarters in Stamford, Conn., GartnerGroup is at the center of a global community of more than 11,000 client organizations served by analysts in 80 locations worldwide. |
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