Fraud and how to resolve fraud claims

Fraud happens when an authorized transaction is made using a customer's payment information by a bad actor. Fraud is a major reason why a customer can raise a dispute at their bank.

The fraudster may pay with a stolen card, bank account or other payment method. In cases like this, the dispute comes to the Paystack Dashboard as a Fraud Claim.

While fraud claims are distinct from chargebacks, disputes that are fraud claims at first can later be logged as chargebacks by the customer's bank usually because the bank is trying to resolve their customer's complaint within the shortest possible time. If you've already resolved the fraud claim, you won't have to do anything else. If you haven't resolved the fraud claim, the dispute will change to a chargeback on your dashboard which means you have to respond within 24 hours or the dispute is auto-accepted.

How can I resolve Fraud Claims?

You can resolve disputes on the Disputes page of your Paystack Dashboard. You can respond to a chargeback either by accepting, or declining the claim. Here are what it means to do either:

Accepting a fraud claim:  This means you either haven't given out value for this transaction and you will be able to reverse it or that you will be able to retrieve the value given for the transaction.

When a fraud claim is accepted, we'll deduct the funds from your next payouts and make a refund to the customer. 

At the moment, Paystack doesn't charge you a penalty when you accept a fraud claim and we also reverse our transaction fees along with the rest of the payment to the customer's bank account once the fraud claim is accepted.

Declining a fraud claim: This means you have successfully provided value for the payment made and you will not be able to retrieve the value provided. In this case, you'll be required to provide information that'll be useful in helping the bank or law enforcement authorities recover the funds from whoever made the fraudulent payment.  

We require the following details to decline a fraud claim:

• Customer Name: The name of the customer who initiated the transaction as stated in their identification document.
• Customer Email: The email address used to initiate the transaction. If you generate an email address for your customer on Paystack and don't collect their email address as part of KYC, you can enter the auto-generated email here.
• Customer Phone Number: The customer's phone number on your records.
• Details of product/service provided: A description of goods or services rendered
• Address item was delivered to/Date item was delivered on: Where the customer bought physical goods, you should provide the address the goods were delivered to and the date when the goods were delivered.
• Account details: If you provide a service where funds are transferred to a bank account, please provide the bank account where the funds were transferred to in the "Reason for Declining Chargeback" text box, along with any further comments you might have.
  
  Here's an example of details provided in the form to decline a fraud dispute. In the example below, the bad customer did not buy any physical goods the delivery details are left blank:
  
  
• Valid receipt: For a receipt to be considered valid, it must contain the customer name, masked PAN (first six and last four digits of the card used) if it's a card payment, transaction amount, transaction date, transaction time and details of the goods/services purchased. This is so that the bank can ascertain that value has already been given for the transaction.

The quality of your receipt is highly dependent on the KYC (Know Your Customer) requirements you've set for your business. With a strong KYC system in place, you'll be able to identify who you're transacting with and provide accurate information about them if the need arises.