Fighting Chargeback Fraud: Why Identity Verification Is Your Best Defense
Chargeback fraud – also known as “friendly fraud” – is a growing and costly issue for service-based businesses. It occurs when a customer disputes a legitimate transaction, falsely claiming it was unauthorized or unsatisfactory, often with the intent of getting services for free. For companies operating online or over the phone, this kind of fraud is particularly dangerous, eroding profit margins, damaging merchant reputations, and straining relationships with payment processors.
At VerifiNow, we specialize in protecting businesses from identity-based threats like chargeback fraud with real-time biometric verification and authentication. Here’s how chargeback fraud works – and how your business can stop it before it starts.
The Anatomy of a Chargeback Fraud
Chargeback fraud typically follows a familiar pattern:
A service is requested and delivered – be it consulting, tech support, or virtual instruction.
The customer pays via credit or debit card.
Days or weeks later, they file a chargeback with their bank, claiming the service was never authorized or never provided.
Without strong proof of identity or transaction validity, service providers often lose these disputes – even when they’re in the right.
Why Traditional Defenses Fall Short
In service industries, especially those without physical goods, defending against a chargeback can be tricky. Unlike e-commerce, there’s no shipping receipt or delivery confirmation. Screenshots, call logs, and emails may not be enough to sway a bank’s decision. And manual ID checks can be spoofed with stolen credentials or synthetic identities.
How VerifiNow Helps You Win the Fight
VerifiNow’s identity verification platform gives businesses the tools they need to prove customer identity at the point of transaction. Here’s how it works:
Government ID Verification: Customers upload a photo of a government-issued ID, which VerifiNow validates for authenticity and signs of tampering.
Facial Biometrics with Liveness Detection: A live selfie is required and matched to the ID. Our AI confirms the person is physically present – not a photo, video, or deepfake.
Address Verification: Our platform cross-references billing information with ID data to confirm alignment.
Digital Audit Trail: Each step is logged, timestamped, and stored – providing powerful, irrefutable evidence in case of a dispute.
This multi-layered verification not only deters fraudsters but gives businesses compelling documentation to challenge illegitimate chargebacks with confidence.
