Fraudulent Chargeback Step-by-Step Guide

Toast does not determine which party wins a chargeback dispute. That responsibility rests solely with card issuers. Additionally, if a chargeback is declined by an issuer, a guest can escalate the dispute to the network. For more information about chargebacks and how they work with Toast, check out this Toast Central article, Get Help With Chargebacks article. 
 

In this Article:

• Identify Fraudulent Chargebacks
• Dispute Fraudulent Chargebacks
• Prevent Future Fraudulent Chargebacks
• Toast Fraud Prevention and Card Processor Capabilities

Identify Fraudulent Chargebacks

There are some warning signs you can be aware of to catch fraudulent chargebacks. Realizing a chargeback is fraudulent could potentially help you win the dispute. Watch out for:
 

• Quick cancellations or disputes after picking up a meal or receiving a meal via delivery.
• Repeat purchases of the same amount, especially for gift cards.
• Gift cards that are purchased and used immediately.

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Dispute Fraudulent Chargebacks

The process of resolving fraudulent chargebacks is much the same as resolving any other chargeback through the chargeback challenger in Toast Web.

Note: Guests might accidentally report a false charge because the name of your restaurant might not match up with the name on their credit card statement. This is what's known as "accidental fraud". In this case, you would still proceed by filling out a chargeback dispute form and providing all relevant information.

Again, Toast does not weigh the merits of the chargeback dispute itself; however, we can and do link out to necessary dispute documentation (e.g. dispute forms and receipts/checks) for merchants and our care team is available to answer general questions.


 

Prevent Future Fraudulent Chargebacks

There are a few steps Toast recommends to curb fraudulent chargebacks at your restaurant.
 

1. For manually entered/phone orders, enter the guest's correct billing zip code. In fact, it is best to utilize a payments processing partner, such as Toast, that employs an Address Verification Service (AVS) as an added measure of security. An AVS will verify the address/zip code to the address on the credit card. The payment will not be authorized if the two addresses conflict. Note: The AVS cannot be verified immediately. This verification will provide helpful documentation if a fraudulent dispute is later filed.
2.  If you suspect fraud, consider asking for a photo ID that matches the name on the guest's credit card.
3. Avoid storing your guests' data in case of a data breach. To ensure data protection, ensure your POS vendor provides strong encryption while meeting  (external link).
4.  Avoid transactions that have multiple card denials. If a guest has multiple cards that are denied, it's very likely that a chargeback will happen even if they eventually get one to authorize.

Toast Fraud Prevention and Card Processor Capabilities

Toast's real-time machine learning-based fraud prevention tool can help block up to 95%* of fraudulent chargeback volume for online orders, representing an average monthly savings of $300** per customer. Toast also has a team of fraud experts working around the clock to assist with specific fraud-related cases.

*As of June 2021.
**These amounts are estimates as of September 2021. Actual results may vary and depend on the unique characteristics of each business.