Trucking companies are beset by plenty of challenges hauling freight from point A to point B – traffic congestion, bad weather, plus loading and unloading delays – before factoring in concerns about getting paid.
Yet all sorts of finicky things can occur on the financial side of the freight picture that can make the physical hassles of hauling cargo pale by comparison.
Indeed, fraud and “chargebacks” plague particular trucking sectors more than others, especially auto haulers. In fact, merchants in general were estimated to have been hit with $5.8 billion in chargebacks in 2016, while U.S. credit card losses due to fraud could exceed $12 billion by 2020. According to a Lexis Nexis report, smaller merchants are the ones hardest hit by chargebacks.
But exactly are “chargebacks” and how do they impact motor carriers?
Suresh Dakshina, president of Chargeback Gurus – a company with 11 years of experience fighting and preventing chargebacks and fraud for transport firms – thinks he’s got an answer to such fiscal issues and spent some time explaining the problems and potential solutions to Fleet Owner.
Define the term “chargebacks” and why they pose a problem for trucking companies.
When customers dispute transactions on their statement through their issuing banks, we refer that as a “chargeback.” If the merchant fails to prove, or in most cases ignore, the legitimacy of these transactions, the bank will withdraw the entire value of each transaction from the merchant's account along with an additional fee.
Common chargebacks in the trucking industry include late shipment, defective ticketing, missing or invalid “advance ship notices” or ASNs, among others.
Those are problems for trucking companies because 5% to 15% of their invoices could be affected by chargeback deductions, which translates into 2% to 10% loss in revenue.
There’s a lot of talk about “fraud” occurring in trucking payments as well; how can motor carriers large and small avoid fraud or at least minimize its occurrence?
Best ways to minimize fraudulent payments are as follows:
- Do not accept the credit card without verifying customer's identity and the billing address.
- Conduct a voice authorization when the transaction is over $1,000.
- Obtain and document signed consent form from the customer after a walkthrough inspection when applicable.
In all, it is best not to accept cards over the phone since it's hard to verify identity.
How can trucking companies use “business analytics” to prevent fraud and chargebacks? What kinds of data help do this?
Business analytics identify the root-cause of chargebacks. You use data to identify issues such as the percentage of chargebacks due to “address verification service” or “AVS” and a “card verification value” or “CVV” number mismatch (CVVs are the three-digit codes located on the back of most credit cards). Data can also tell when chargebacks happen due to poor customer services or due to a customer’s attempt at fraud.
If the trucking company has more than 5% of their chargebacks due to AVS and CVV mismatch, they can activate the AVS and CVV match on all future transactions. As a result, the system is set to decline credit cards with a mismatch on AVS and CVV, thereby preventing fraudulent card uses. Such data minimizes fraudulent card usage and fraudulent chargebacks to a greater extent.
Do you see the chargeback issue increasing down the road as a problem for trucking firms? Why or why not?
I see the problem increasing down the road based on my experience with consumers becoming more comfortable with purchasing automobiles from different states via the internet.
While the trucking industry can benefit from such internet purchases, the industry itself, however, becomes more vulnerable to fraud and chargebacks.
Based on my previous interaction with some of the auto transport companies that still rely on traditional manual paper filing, there is no way for them to be aware of potential fraud or chargeback.
Some of them do not even open chargeback related notice from the payment processor.
How does your company’s methods help ease such problems?
Our FPR-360 completed chargeback management solution automatically tracks all chargebacks digitally to eliminate the manual work. Through our online portal, firms can run analytic reports to gain a better understanding of the root causes and view chargebacks we recover.
With our 13 years of industry experience, we know what evidence to collect in order to win such cases.
Our tool is designed to empower trucking firms to focus on growing their business while we monitor various data points to fight, prevent, and recover chargebacks.