February 21, 2020
Businesses see 3-8x the return on investment with Kount’s Friendly Fraud Prevention Solution Featuring Visa’s Merchant Purchase Inquiry program.
Many businesses may not know that they have a friendly fraud problem – it’s difficult to identity it or distinguish it from criminal fraud. Friendly fraud is often mistaken as criminal fraud because issuing banks lump these types of fraud together under the same chargeback code. But, did you know that as much as 86% of all chargebacks can be from friendly fraud? And, it’s sobering to find that 81% of consumers admitted to filing a chargeback simply out of convenience.
It can seem daunting to fix a friendly fraud problem when you don’t know if you have one or how to find it in the first place. However, there is an important solution that is delivering measurable financial results. You may have heard about the Visa Merchant Purchase Inquiry program (VMPI), or maybe you heard about it, but thought it did not apply to your business. But, the friendly fraud problem may be getting too big to ignore.
What is Friendly Fraud and How Does VMPI Address It?
The most frequent types of friendly fraud are accidental friendly fraud, when a customer calls the credit card company for a charge they don’t recognize, and intentional friendly fraud, when the customer receives their purchase but claims it never arrived.
Accidental friendly fraud occurs when customers request refunds from their issuing banks, claiming that transactions on credit card statements are fraudulent. Customers may simply not recognize a purchase and upon dispute, financial institutions automatically refund customers without validating the claim. Then, the financial institutions recover the amount of these payments from the transacting businesses. This results in chargebacks, lost goods, potentially time-consuming dispute processes, and placement in chargeback programs if chargeback ratios are too high.
VMPI Tackles Friendly Fraud Challenges
Controlling friendly fraud chargebacks requires a specialized set of tools that are not available in traditional fraud detection solutions.
To help businesses tackle criminal fraud, as well as friendly fraud, Kount has integrated with VMPI. Businesses are seeing a significant return on their investment to the tune of 3-8x ROI. Not only are they able to reduce financial losses and chargebacks from friendly fraud, they are able to stop friendly fraud before it happens by giving banks more information at the time of a customer inquiry. When a customer calls their bank to dispute a charge, with VMPI, banks can request additional information from the business in order to validate purchases.
How Does Your Business Earn a Return on Investment with VMPI?
An advantage of integrating with VMPI is that there is no upfront cost – it is all upside. Businesses only pay a small portion of deflections billed, regaining the rest of the amount they would have lost completely or spent in litigation. Businesses avoid chargebacks and they see positive results: immediate money back, and time saved.
Friendly Fraud Can Be Solved in Any Industry
With Kount’s VMPI solution, businesses across various industries see staggering results:
- An online appliance company experienced both intentional and accidental friendly fraud. After implementing Kount’s integration to VMPI, they saw immediate relief, gaining an almost 7x a return by helping customers recognize legitimate purchases.
- A technology education platform began tackling their trickier friendly fraud problem and immediately saw over 3x ROI.
- A product marketplace had rampant friendly fraud and saw an almost 9x ROI by adopting VMPI.
Overall, businesses can reduce dispute timeframes from weeks to seconds by communicating with issuers in real time. One other important benefit? Businesses can protect and build customer loyalty by communicating accurate information when customers have questions about products purchased from your brand.