How to prevent fraud and chargebacks

Written by

The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedMay 20242 min read

In recent years, we’ve seen a significant shift in customers choosing the convenience and speed of online and app-based purchases. However, this brings businesses the growing challenge of managing and fighting back against fraudulent payers who are trying to find ways to avoid paying or, worse, looking to exploit them and their data.

If your business accepts payments online then it’s essential to feel confident that you have the best measures in place to protect your payments as well as your customers’ details.

Payment fraud facts

54%** of businesses see fraud as a top threat, so you’re not alone in your concerns
1.5%** of revenue is lost each year due to fraud related incidents. On the surface this may not seem that much, but this doesn’t account for the time and resources spent trying to remedy the impact of fraudulent activity.
We know that 12%** of all direct debits are set up with non-matching data and could be fraudulent, which contributes to a large proportion (5%) of chargebacks that occur due to lack of payer authorization.
A significant 82%** of payers expect direct debit details to be checked when setting up a new mandate, putting the onus on businesses or banks to flag any incorrect details or errors

How does GoCardless help businesses address payment fraud and chargeback prevention?

We are excited to announce the launch of our new fraud-protection feature, Payer Name Verification, which is available now. Our new feature automatically checks that your payers’ names match the name on the bank account details submitted when setting up direct debits with you. This will reduce your exposure to fraud, chargebacks, and is aligned to what your payers experience in their personal banking. With the addition of Payer Name Verification in the UK, we're adding enhanced, built-in protection for all UK payments.

We feel this extra level of detail is so vital to businesses that the feature is automatically enabled for any businesses that collect payments via the GoCardless Dashboard, and can be easily added for those using the GoCardless API.

We know that successful and safe payments are at the heart of any business, so we take security and fraud prevention very seriously.

Our team is dedicated to making payments as secure as possible, which is why we have a suite of tools to protect you from fraud, such as modulus checking, Verified Mandates and GoCardless Protect+.

** 82% of 500 participants in Attest consumer survey 13/02/2024

** 12% = average % of no match between 18/12/23 and 06/02/2024

** 40% of 500 participants in Attest consumer survey 13/02/2024

** Average of £2-£3M ‘reason code 5’ chargebacks per year = 5%

** 1.46% average revenue lost globally by merchants (Non-GC merchants)