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eConsumerServices Warns Consumers of eCommerce Blacklisting Risk.

Merchants have been using the blacklist as a tool to cut down on online fraud, yet the very thing they are using to protect themselves could have long-term harmful impact on the eCommerce landscape as many consumers inadvertently place themselves on the list. Gary Cardone of eCommerceServices says there is one simple tool both parties are not using: education.

TAMPA BAY, Fla., Sept. 15, 2015 /PRNewswire-iReach/ -- In the 2015 Global Fraud Survey published by the Merchant Risk Council, 82% of the 165 merchants surveyed reported managing online fraud via internal blacklists, and 6% reported they planned on using blacklists within the next year. (1) While companies use blacklists (also known as fraud prevention lists) in order to cut down on eCommerce fraud, Gary Cardone, CEO of dispute mitigation company eConsumerServices, states that blacklists are can often be an oversimplified solution to the problem. Blacklists can prevent legitimate consumers from making purchases, harming both the consumer and the merchant in the long run.

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Blacklists are used to identify customers who have previously filed a chargeback and to prevent those customers from placing an order in the future. The information contained in a blacklist will include names of consumers, credit card details, email and physical addresses and sometimes entire countries that have been identified as risky. According to the 2015 Global Fraud Survey, some online retailers rely on blacklists shared between several merchants, while some merchants reported utilizing industry-specific blacklists. (1)

However, many orders tagged as fraudulent due to a consumer being placed on a blacklist are in fact made in good faith. According to Riskified, between 40% and 70% of orders that merchants decline are legitimate purchases. (1) Per Cardone, 20 million out of 170 million adults in the United States are on various blacklists. This number is more staggering when taking into account that not all adults have credit cards. (2)

Cardone notes that there has been an increase in chargebacks. In the past two years, chargebacks have risen by 41%. (2) This increase accounts for both valid and fraudulent chargebacks; however, both forms of chargebacks create stress in the system. Chargebacks can lead to merchants readjusting cancellation and refund policies, terms and conditions, and how they treat eCommerce transactions altogether. Additionally, some merchants will even raise prices as they have enough leakage associated with chargebacks to warrant the increase.

Cardone warns consumers against filing chargebacks, as what seems like a good idea at the time could inadvertently put the consumer on a blacklist. Then when the consumer goes to make another legitimate online purchase, he or she is prevented from doing so. "Even if a transaction or return is legitimate, banks and merchants may not see it as such," says Cardone. "In this case, your past history as a consumer works against you."

Cardone stresses the need for consumers to be aware of what could potentially happen when filing a chargeback. "Contacting the bank directly sees as if it's the easiest solution when seeking a refund, however the action could have long-term effects that are difficult to undo," says Cardone. "Many consumers inadvertently end up on a blacklist because they are unaware of how the process really works."

It does happen that a consumer needs to return something that wasn't delivered as promised, however in these situations, Cardone urges the consumer to seek out assistance. "An expert will have a system in place to deal with issuing banks, and then can therefore minimize and mitigate the amount of loss associated with eCommerce," he adds.

eConsumerServices maintains that educated consumers will lead to a healthier, growing online marketplace. Through education, the consumer will gain protection, and balance can be achieved in an industry that is continuously on the verge of tipping in one direction or another.

About Global Risk Technologies and eConsumerServices:

Global Risk Technologies is most known for its role in payment processing solutions that cater to each side of the value chain: Chargebacks911.com and eConsumerServices.com. The firm is headquartered in Tampa Bay, Florida, with offices in Ireland and Atlanta. They have approximately 350 employees worldwide, and currently manage over 150MM in transactions each month, with clients located in the U.S. and Europe.

eConsumerServices focuses on the cardholder or consumer in order to encourage transactional resolution before it progresses to a chargeback. The company caters to the B2C (business-to-consumer) sector of Global's initiative, in working to realize greater standardization and increased efficiency within the payments industry. eConsumerServices is an online mediation service that works to effectively and efficiently resolve transaction issues between merchants, consumers and banks. For more information, visit www.eConsumerServices.com.

1. Goodis, Natalie. "Fraud Prevention Blacklists: The eCommerce Sales Killer"; Riskified; August 3, 2015. blog.riskified.com/fraud-prevention-blacklists-the-ecommerce-sales-killer/

2. Bruggink, Diederik. "Addressing eCommerce Chargebacks Effectively: An Interview with Gary Cardone"; Journal of Payments Strategy & Systems; January 24, 2015.

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Date:Sep 15, 2015
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