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Hotel Payment Processing Series: Early Fraud Warnings and Getting Ahead of Chargebacks

One way to bolster your fraud prevention strategy is to act quickly when you get an early fraud warning (EFW). Read on to learn how EFWs can help you respond to fraudulent activity before it results in chargebacks.

What are early fraud warnings (EFWs)?

Early fraud warnings are notices generated to flag payments that are suspected to be fraudulent.

How does an early warning get triggered and created?

First, the cardholder makes a claim to their card issuer or bank. EFWs are then automatically generated by the credit card issuer to alert merchants of the claim and give you time to respond before it becomes an actual dispute. This helps you avoid chargeback costs and keep your dispute rate low.

Generally, EFWs become disputes 70-90% of the time.

How are merchants notified of an early fraud warning?

Work with your payment processor to implement and notify you of EFWs. Processors like Stripe, Sertifi’s processing partner, use APIs to receive and share EFWs using a direct connection to credit card notification systems.

Here's an example Stripe notification:


How should merchants respond to early fraud warnings?

You'll usually have 24-48 hours to respond, so we recommend immediately contacting your guest to determine the reason for the dispute. Oftentimes, it’s as something as simple as a refund not yet processed or an unrecognized charge. By getting ahead of a dispute, you’ll be able to offer guests alternative options to a refund or chargeback, like giving them a voucher. You’ll also be viewed as a merchant who proactively considers and ensures the safety of your guest’s payment information.

While EFWs aren’t a fix-all to disputes, it’s an easy tool to take advantage of with your payment processor to get ahead of chargebacks. If you’re currently a Sertifi user and would like help getting EFWs set up, don’t hesitate to get in touch.


Building a Proactive Hotel Fraud & Chargeback Prevention Strategy

Get insights to stay proactive and drastically reduce your fraud and chargeback risk, including:

  • What makes hotels uniquely vulnerable and the types of fraud to look out for.
  • The growing cost and complexities of chargebacks.
  • New strategies to prevent and respond to risks – from improving payment security to guest management to staff training.
Looking for more payment insights?

About the author

Mike Ryan

Mike Ryan is the enterprise director of payments at Sertifi. Mike brings over 20 years of experience in sales and payment technology. At Sertifi, he manages the strategy and adoption of payment solutions, particularly SertifiyPay, Sertifi’s proprietary payment processor – all aimed to make payments simpler and more secure for the hospitality and travel industry.