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In e-commerce, especially on marketplaces, fraud is not an “if,” but a “when.” You should always be one step ahead and not wait for something bad to happen. Data protection, user verification, monitoring of suspicious activity, and a well-thought-out payment and refund system are the main tools that can save your marketplace from big problems.
Chargebacks, or chargebacks in Russian, are a separate pain for any e-commerce platform, especially marketplaces. For those who are not familiar with the topic: a chargeback is when a buyer submits a request to the bank for a refund for a transaction, claiming that the goods were not received, were defective, or were purchased without their knowledge. Banks most often side with the client, and marketplaces have to not only return the money, but also pay additional fees. Here are a few stories about chargebacks from the practice of marketplaces and how these problems were solved.
We noticed that certain users would make large orders, especially for expensive electronics and accessories, and after a few weeks, the bank would start reviewing their chargebacks. The fraudsters would claim that the goods were not delivered, although we had all the evidence that the parcel was received: tracking numbers with delivery and even signatures of the customers. But during the chargeback process, banks often ignored this evidence and sided with the customer.
How we fought: Improving the documentation for each transaction and delivery played a key role in the fight against such chargebacks. We began collecting additional evidence: photos of the delivery of goods, GPS coordinates of couriers, scans of signatures, and even video recordings from cameras in warehouses where shipments were recorded. We also engaged third-party partners specializing in combating chargebacks, who negotiated with banks on our side.
It turned out that many banks do not even consider all the information provided in detail unless the seller insists. We began to act more actively, filing appeals against chargebacks and providing all possible evidence. As a result, the percentage of successful chargeback decisions for us has increased significantly, but, unfortunately, we have not been able to completely get rid of this problem.
Most of these cases were due to people simply forgetting about the subscription, but there were also real cases of fraud, when buyers used the services for several months and then tried to return the money for the entire period through the bank, claiming that they did not know about the subscriptions.
How we fought: We started to take a tougher approach to subscription notifications: a few days before each write-off, we sent email and SMS notifications with a reminder of the upcoming payment. We also added a separate section to the site where users could easily manage their subscriptions, see upcoming write-offs, and turn off auto-renewal.
In addition, for all new subscription users, we have introduced mandatory confirmation via 2FA (two-factor authentication) to eliminate the possibility of fraudulent subscription to paid services without the user's knowledge. These measures have reduced the number of subscription chargebacks, although, of course, we have not been able to completely eliminate this problem - there are always people who simply forget or deliberately try to deceive the system.
The problem was aggravated by the fact that international shipping always involves risks: parcels could be delayed for several weeks, and the buyer simply lost patience. Some customers sincerely believed that their goods were lost and filed a chargeback, even if the goods were already on their way.
How we fought back: To reduce the number of such chargebacks, we began to more actively inform customers about the status of their orders. Detailed delivery route information was added to each order, with regular updates. If there were delays, we immediately alerted customers, giving them the opportunity to change or cancel the order before they started making requests to the bank.
We also partnered with courier companies to provide us with more detailed tracking data. This allowed us to better track each stage of delivery and show customers where their goods were. In some cases, we offered customers partial refunds or discounts on future purchases to compensate for the wait, which helped reduce frustration and prevent chargebacks.
The problem was that the marketplace, as a platform, was essentially between the buyer and the seller, and although the money was transferred directly to the seller, the buyers still considered the marketplace responsible. As a result, we had to deal with the banks and compensate the customers, which led to serious financial losses for the platform.
How we fought back: After this incident, we revised our rules for working with sellers. First, we strengthened the process of checking new sellers, requiring them to provide bank guarantees or other financial collateral. This helped reduce the risk of sellers disappearing with money.
Secondly, we implemented a temporary funds hold system. The money for the purchase was frozen for several days after the goods were shipped, and only if the buyer confirmed receipt of the order, the funds were transferred to the seller. This gave us more confidence that the sellers were fulfilling their obligations.
How we fought back: We tightened moderation for new sellers, especially those offering digital or hard-to-verify services. We introduced mandatory verification of all digital products before listing on the platform, as well as freezing funds for services until the buyer confirms receipt. This helped minimize the number of scams in this category and reduce chargebacks.
Source
Chargebacks, or chargebacks in Russian, are a separate pain for any e-commerce platform, especially marketplaces. For those who are not familiar with the topic: a chargeback is when a buyer submits a request to the bank for a refund for a transaction, claiming that the goods were not received, were defective, or were purchased without their knowledge. Banks most often side with the client, and marketplaces have to not only return the money, but also pay additional fees. Here are a few stories about chargebacks from the practice of marketplaces and how these problems were solved.
1. Fraudulent chargebacks - "I didn't receive anything!"
One of the most common schemes is when a buyer orders a product, receives it, but then initiates a chargeback, claiming that the product was not delivered. In one of our marketplaces, such a scheme emerged en masse after big sales on Black Friday.We noticed that certain users would make large orders, especially for expensive electronics and accessories, and after a few weeks, the bank would start reviewing their chargebacks. The fraudsters would claim that the goods were not delivered, although we had all the evidence that the parcel was received: tracking numbers with delivery and even signatures of the customers. But during the chargeback process, banks often ignored this evidence and sided with the customer.
How we fought: Improving the documentation for each transaction and delivery played a key role in the fight against such chargebacks. We began collecting additional evidence: photos of the delivery of goods, GPS coordinates of couriers, scans of signatures, and even video recordings from cameras in warehouses where shipments were recorded. We also engaged third-party partners specializing in combating chargebacks, who negotiated with banks on our side.
It turned out that many banks do not even consider all the information provided in detail unless the seller insists. We began to act more actively, filing appeals against chargebacks and providing all possible evidence. As a result, the percentage of successful chargeback decisions for us has increased significantly, but, unfortunately, we have not been able to completely get rid of this problem.
2. Chargebacks by subscription
Another scheme our marketplace encountered was related to automatic subscriptions. We introduced the option of premium subscriptions for sellers, which allowed them to access additional analytics tools and product promotion. Everything was transparent: customers agreed to the subscription and confirmed automatic write-offs every month. However, after some time, a wave of chargebacks began with complaints that "write-offs occurred without the customer's knowledge."Most of these cases were due to people simply forgetting about the subscription, but there were also real cases of fraud, when buyers used the services for several months and then tried to return the money for the entire period through the bank, claiming that they did not know about the subscriptions.
How we fought: We started to take a tougher approach to subscription notifications: a few days before each write-off, we sent email and SMS notifications with a reminder of the upcoming payment. We also added a separate section to the site where users could easily manage their subscriptions, see upcoming write-offs, and turn off auto-renewal.
In addition, for all new subscription users, we have introduced mandatory confirmation via 2FA (two-factor authentication) to eliminate the possibility of fraudulent subscription to paid services without the user's knowledge. These measures have reduced the number of subscription chargebacks, although, of course, we have not been able to completely eliminate this problem - there are always people who simply forget or deliberately try to deceive the system.
3. Chargebacks due to long delivery times
Often, chargeback issues arose due to delays in delivery. In one project, we worked with international suppliers, and delivery could be delayed due to logistical problems or customs delays. Buyers, waiting for their goods, began to panic and submit chargeback requests, claiming that the goods did not arrive.The problem was aggravated by the fact that international shipping always involves risks: parcels could be delayed for several weeks, and the buyer simply lost patience. Some customers sincerely believed that their goods were lost and filed a chargeback, even if the goods were already on their way.
How we fought back: To reduce the number of such chargebacks, we began to more actively inform customers about the status of their orders. Detailed delivery route information was added to each order, with regular updates. If there were delays, we immediately alerted customers, giving them the opportunity to change or cancel the order before they started making requests to the bank.
We also partnered with courier companies to provide us with more detailed tracking data. This allowed us to better track each stage of delivery and show customers where their goods were. In some cases, we offered customers partial refunds or discounts on future purchases to compensate for the wait, which helped reduce frustration and prevent chargebacks.
4. Third-party seller scams
On marketplaces with many third-party sellers, chargeback fraud can be a real problem. Sellers can accept payments without shipping the goods, and then disappear, leaving buyers to deal with the problems through the bank. In one of our projects, there was a massive wave of chargebacks due to one such seller who, having collected money for expensive goods, simply did not send them.The problem was that the marketplace, as a platform, was essentially between the buyer and the seller, and although the money was transferred directly to the seller, the buyers still considered the marketplace responsible. As a result, we had to deal with the banks and compensate the customers, which led to serious financial losses for the platform.
How we fought back: After this incident, we revised our rules for working with sellers. First, we strengthened the process of checking new sellers, requiring them to provide bank guarantees or other financial collateral. This helped reduce the risk of sellers disappearing with money.
Secondly, we implemented a temporary funds hold system. The money for the purchase was frozen for several days after the goods were shipped, and only if the buyer confirmed receipt of the order, the funds were transferred to the seller. This gave us more confidence that the sellers were fulfilling their obligations.
5. Chargebacks for subscriptions to fake services
There was a case where fraudsters created sellers on the platform that offered non-existent digital services. Buyers signed up for these services, but in reality received nothing, and, of course, quickly began filing chargebacks. The problem is that the fraudulent sellers managed to receive payment before the chargebacks were processed, and disappeared, leaving the marketplace with debts to the banks.How we fought back: We tightened moderation for new sellers, especially those offering digital or hard-to-verify services. We introduced mandatory verification of all digital products before listing on the platform, as well as freezing funds for services until the buyer confirms receipt. This helped minimize the number of scams in this category and reduce chargebacks.
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