Business owners: 6 Ways Of Reducing Consumer Fraud

It’s unfortunate to say, but consumer fraud is certainly a risk your business will face. It’s a hot topic at the moment, with third-party food delivery apps often affecting small businesses due to lenient refund policies, which of course should exist, but could do with being a little more robust in how they handle customer complaints.

But consumer fraud is not only found via the odd refund request. It can sometimes be caused by faulty delivery feedback, damage to items, an overzealous interpretation of consumer rights, or those who may wish to abuse your systems for continual promotions, free trials, credit, and more.

Of course, you will operate under regulations designed to reduce consumer fraud, such as keeping records of customer accounts for six years after they close their account, just in case law enforcement requires you to provide this information to help them in their investigations. 

In the meantime, there are some proactive approaches you can take. In this post, we’ll discuss various means by which to reduce the consumer fraud you might experience:

Secure Web Design & Bug Squashing

Secure web design and a robust team dedicated to capable bug squashing is a good investments. The truth is, though, that not all businesses can afford to have a dedicated team focused on this. Thankfully, you can outsource web design like this, and also pay for managed IT server hosts that can help you address issues with your web hosting where available.

But why is this necessary? Well, websites without secure portals, encrypted pages or the ability to patch out problems can ultimately lead to issues. For instance, if an item is incorrectly listed as free to customers that follow a broken link, they may be able to order a good amount of free merchandise before you squash the issue, this is why it is vital to employ the services of web experts such as website design with XCITE or another reputable company you are in contact with.

Furthermore, a robust bug reporting system can help you notice and address these issues more quickly. But what if a customer manages to find that glitch in the system and exploits it for their own purposes?

Robust Consumer Agreements

A consumer agreement, which, of course, the consumer must agree to if you are to serve them, can help you plug the holes of your platform. So for instance, if a customer manages to order a dozen free items because of the example we laid out above, you have the right to void that transaction and make sure that their account is limited.

Or, you can void the transaction and then at least keep them as a customer with a small gesture, perhaps some basic credit in your store. It might not feel good to do, but of course, there’s a delicate approach towards customer relations to get right here, and ultimately all they did was follow up on the offer presented to them.

Regardless, a consumer agreement gives you an out. This also gives you the right to suspend service if you genuinely wish to, such as to a consumer who repeatedly requests refunds, rarely pays their invoices on time, or otherwise causes you difficulty. Sometimes, the best way to reduce consumer fraud is to properly filter who you accept as a consumer. 

Chargeback Management

Chargebacks can be problematic for companies, and ultimately end up penalizing them if too many are processed. A basic example of this is seeing additional costs that stem from the associated fees, or it might even lead to higher acquiring fees if your business is considered to be part of a high-risk industry. Not only that, but sorting through these takes time, as does the legal consultation you may need when seeing your way through the issue.

Using a chargeback management with Solidgate, https://solidgate.com/chargeback-management/ can help you manage your way through this by helping you minimize friendly fraud, prevent disputes, reduce the confusion that may lead to chargebacks, and ensure the situation resolves itself amicably. This way you can achieve a lower chargeback ratio.

Now, many chargebacks will be in good faith, and that’s important to recognize. But if chargebacks occur multiple times from one person, one login, one bank with multiple virtual cards, you can block those from your service until the issue has been resolved or communication has been completed.

Free Trial Limitations Per Household

If you run a subscription or premium service, then you might offer free trials in order to encourage people to check out what’s on offer. This is very common, with trails lasting from 7, 10, to 14 days or even a month long. In some cases, you may even allow the free trial to last longer than that, so people get used to the privileges and won’t feel so bad about paying for what they’ve become accustomed to.

That said, a free trial program can sometimes be abused by those customers who make new accounts, with virtual credit cards offered by some challenger banks. A good way to get around this is to limit a certain number of free trials to certain device ID’s, IP addresses, phone numbers, or of course, credit card information. You might not be able to catch 100% of free trial reusers this way, as they may be willing to get a new phone number each time, or go to great effort to register on public WiFi.

That said, with those measures, you can make sure a great portion of bad-faith free trial redemptions are limited.

Account Identifiers

Account management is also a provision you may offer, for clear and obvious reasons. Yet it’s true to say that in order to create an account, you may require a little more information from those who sign up. This way, you can ensure those accounts you hold on your system are of verified people.

For instance, you may ask for a telephone number, an email address, and an address. The former two you may send verification codes to in order to make sure they’re legitimate and in-use. You get to decide how much you’ll require from your consumers in order to use your service. When people have more of their personal information tied to their account, they’re less likely to exploit your system.

An account identifier can also be used to clear suspicious accounts. So for example, you might find that too many suspicious payments, at odd times and for odd amounts come from a single account. 

You may temporarily restrict this, on the condition that the customer proves their bank information or provides you with a scan of a photo ID, uploaded to your secure document portal, and then deleted from your systems immediately in line with your privacy policy. The customer can then refuse this for a full refund of their store credit, or prove they’re a real person, and continue on unimpeded. This will require the correct training of support employees in handling sensitive documents.

Robust Records

Keeping robust records of all consumer activity, for as long as you wish to (as mentioned, six years is the most common length of time), and preserving this can help you better use that information in lawsuits if you wish to litigate against certain consumers, or at least provide the suspicious activity on your end and the scale and the appropriateness of how you responded. In the long run, it will make a real difference. If you do end up needing legal representation, you’ll want to look for a civil litigation attorney from a reputable company like Lawsuit Legal: these types of legal professionals are experts in consumer fraud cases. 

With this advice, you’re sure to reduce consumer fraud more readily. In addition to this, reviewing the latest problems, like text spoof scams claiming to be you and informing your customers no one will ever ask for their password, will be helpful.