US E-commerce - Product Fraud Insurance

Today, I learned about an interesting piece of domain knowledge. When running an e-commerce business in the US, the market is huge, and a lot of strange things can happen. Credit card companies can easily issue chargebacks based on user complaints, even if the customer has already received the goods. The merchant might then receive a box of rocks instead of the actual returned product. Although merchants can file a dispute with the bank, the process is time-consuming and tedious. Many payment gateways will indicate whether a user is a fraud risk at the time of the transaction, but this complicates the process of doing business. Consequently, specialized insurance companies offer services, charging a premium of less than 0.5% of the product's sale price, to protect e-commerce businesses from such fraudulent activities.

If this kind of fraud happened in Taiwan, you could probably just drive over or report it to the local police, and they would likely find the person's home within a few days.

For example, the US-based company Signifyd provides online insurance services for e-commerce businesses. Signifyd

Additionally, there's Riskified, which operates in even more countries. Riskified