Hey Alexa, File a Chargeback

Sydney VaccaroFraud Prevention1 Comment

Hey Alexa, File a Chargeback

Internet of Things (IoT) devices are all around us. Devices ranging from smart speakers, cars, refrigerators, light bulbs, printers, and more, can connect to each other and the internet to make our lives easier. IoT devices are quickly emerging as a new avenue for shopping and payments. By simply speaking a few sentences to a smart speaker, consumers can purchase an array of items and subscriptions.

As a consumer, purchasing through an IoT device creates a crazy-easy check out experience. But for merchants, it may not be as simple to execute IoT sales correctly and safely. While merchants can gain sales and customer loyalty through this new channel, these IoT device purchases could result in disputes and harm customer relationships.

Cardholders Using Connected Devices

A Visa-sponsored report found that in 2019, 31% of Americans had voice-enabled devices, and 31% of them use the technology to make purchases. This technology being used to make purchases has continued to grow, and will likely continue to rise as a shopping avenue.

Connected devices don't just stop at the voice. The Samsung Family Hub Refrigerator allows consumers to integrate into an Amazon-Echo-like product that automatically re-orders products when they reach a low level in your fridge. Soon cars will be equipped with the ability to pay for things like parking, coffee, and gas from the dashboards with built-in payment technology.

As more technology keeps improving and making consumers' lives easier, the ability to make effortless purchases will continue. But could effortless transactions cause merchants to receive more disputes?

How IoT Purchase Could Cause Disputes for Merchants

So how can IoT purchase cause disputes for merchants? Let's take the example of the smart refrigerator buying items that are low in the fridge. This transaction would be a frictionless process, so the cardholder may not recognize the charge because they did not actually authorize the specific purchase. An unrecognized transaction can result in a friendly fraud dispute. On the other hand, a cardholder may not want to purchase that item right now. When the transaction happens, the cardholder doesn't want to spend the money or even want the product, which results in the cardholder going through the hassle of returning the product (if they can) or disputing the charge in an attempt to get their money back.

Being available to your customers wherever they shop is a great tactic for merchants to gain customer loyalty and sales. At the same time, it is also vital to take proactive measures to prevent fraud and disputes wherever possible. By creating healthy friction, excellent communication, and a highly secure system, merchants will be able to avoid disputes on IoT device purchases.

Friction Isn't Always a Bad Thing

While merchants have been told that they want as little fiction at checkout as possible, some friction isn't harmful. In a recent article, payment experts have started to notice a friction evolution and an attitude shift among customers. Over the last few years, respected and trusted companies have experienced data breaches. These breaches were highly publicized and made customers aware of the data they were handing over to merchants. The other effect of the breaches was that customers were worried that a fraudster would use their payment information. Because of this customer education, instead of security at checkout causing a bad customer experience, it can actually gain trust with your customer.

Making it too easy for cardholders to purchase can raise concerns. For example, if a child can easily make a purchase through a smart speaker without a parent's permission by merely asking for an item, it can result in unknown purchases, unnecessary returns, and bad customer experiences. By creating a healthy amount of friction, merchants can avoid friendly fraud and chargeback fraud disputes, return costs, and more. Fraudsters

Follow the Money

If merchants make it too easy to check out, fraudsters will take advantage. Smart-speaker users have said strangers hacked into their devices and issued voice commands to Alexa, announcing false North Korean missile attacks, turning up home thermostats, and general insults. Although these incidents on their own are frightening, they make us realize the potential for even more damaging hacks into voice assistants because these devices have access to personal and payment information. Access to this information means that hackers could use voice assistant devices and voice command apps to access websites and purchase things without the owners even being aware of it. This is where merchants who sell products through voice assistants will need to be mindful of fraudulent purchases coming from these channels.

Communicate With Your Customer

Purchases made through IoT devices could mean the cardholder is being charged for goods without even seeing a picture of the product or just automatically being shipped an item. This is where communication is necessary to prevent disputes or annoyed customers. Without any communication, a cardholder could become easily confused by the charge and think it is fraudulent. By simply sending a confirmation or reminder email can help customers understand what the charge is for and avoid unnecessary disputes.