U.S. Cities With The Highest Chargeback Ratios

chargeback ratios

U.S. Cities With The Highest Chargeback Ratios

U.S. Cities With The Highest Chargeback Ratios

There is no doubt that as a retailer chargebacks can be detrimental to your business. Not only are they costly due to the refunds and fees associated with them, but they are usually dealt with through third parties and not directly with you as the merchant. Instead of just restocking items and processing a transaction as done with refunds, there is now paperwork and phone calls to make in order to prove your innocence.

Unfortunately, some consumers willingly and knowingly abuse the chargeback system. They order goods and services online and once delivered, they call their issuing bank and reverse the charges. This is known as “friendly fraud” or “cyber shoplifting” and is costing online retailers over $15 billion a year.

How to Reduce Your Chargeback Ratios

Chargebacks can occur with any business, but “friendly fraud” is most common with online retailers. Usually this is because the internet and online transactions offer a level of anonymity that is unlike transactions at brick and mortar retail shops.

So what can you do to reduce chargeback ratios in your business? Limiting the amount of business you do in the following geographic areas may be a start. According to Chargeback911, these cities are prone to this type of abusive behavior:

  • Show Low, Arizona — 2.2%
  • Port Washington, New York — 1.7%
  • San Jose, California — 1.5%
  • Miami, Florida — 1.5%
  • Astoria, New York — 1.5%
  • Danvers, Massachusetts — 1.2%
  • Philadelphia, Pennsylvania — 1.2%

Avoiding doing business in cities like the above will most likely decrease your chargeback ratios, but that is not the most profitable solution. After all, blacklisting geographic areas may mean blacklisting legitimate customers.

Instead, take the appropriate security measures that will limit chargebacks. For example, require all customers names and verifiable contact information. Keeping a list of those who have contributed to your chargeback count in the past and blocking them from future purchases may also be a good alternative. However, this may take too much time if your have a large business with thousands of transactions.

For an easier, less time consuming approach, consider using security settings such as catching certain credit and debit card numbers, cities or IP addresses and holding them for authorization. This way the transaction can still go through, but it gives you time to review the information before a blatantly fraudulent sale is completed.

At Choice, we offer fraud management programs that help reduce chargebacks and increase your profitability. For more information, click here to view our CB Dispute platform.