By Monica Eaton-Cardone, Co-Founder and COO of Chargebacks911

The way merchants conduct their business on peak sales days such as Black Friday and Cyber Monday will be a little different this year, along with how they approach chargebacks.

This is since the majority of businesses have had to either revamp, focus more heavily on, or freshly launch e-commerce operations to adjust to the lockdown restrictions in place across the UK – stimulating a 74% growth in online shopping since COVID-19 began.

Don’t be fooled by this growth, though. It masks the issues that retailers have been facing with orders, deliveries, spikes in web traffic, new technology integrations, UX, and more. And these issues have led to a sharp rise in genuine chargebacks.

At the same time, friendly fraud has become increasingly easier to commit, since (1) consumers are shrouded by anonymity when shopping online, and (2) contactless deliveries mean they don’t have to confirm that a package has arrived safely at the point of exchange.

This has been exacerbated by changes in consumer behaviour as a result of the financial implications of COVID-19 and the subsequent economic downturn. Sadly, some of those impacted by furlough and job losses have turned to the chargeback system to recoup money spent on previous purchases, adding to the increased levels of friendly fraud – which were growing even before the pandemic.

Preparing for the new retail landscape

As a result of these trends, some industries are now facing 10 times the number of chargebacks than prior to the COVID-19 outbreak. And with new lockdown restrictions in place, the bustling online space remains fertile ground for payment disputes (chargebacks).

So, while utilising an online presence will undeniably be the key to merchants’ success this peak sales season, they must also be prepared for the added risk imposed by the period of rapid transformation that has been taking place across the industry.

If it isn’t already, chargeback mitigation should be a core component of their holiday season plans. Incorporating it into their operations will also help them as we move into an increasingly digital new normal, while protecting bottom lines during the current economic downturn.

Where to begin?

So, what precautions should businesses be taking ahead of this year’s festive peak sales events?

#1. Employ complimentary fraud tools: Criminal fraud often results in chargebacks as consumers dispute fraudulent payments made using their details. To prevent the plethora of fraud types out there, businesses should incorporate a multilayer strategy.

#2. Use fraud scoring: Once these fraud tools are implemented, it’s often unmanageable to manually review every transaction. So, merchants should use fraud scoring tools which profile transactions and flag any that breach risk thresholds.

#3. Verify orders when needed: It may seem counterintuitive to contact buyers and ask if they’re really the ones who submitted a transaction, however they tend to be pleased when this happens. It lets them know you take their security seriously, while stopping chargebacks being instigated due to criminal fraud.

#4. Comprehensive (live) customer service: Happy customers usually mean less chargebacks. They can shop around-the-clock online, so companies must provide customer service without time restrictions – especially as e-commerce will be the go-to for most consumers this year.

#5. Fast response: When customers reach out via channels like email or social media, they expect that they’ll receive a prompt response. If they find you to be unresponsive, the likelihood they’ll file chargebacks will increase. Response times should be kept under 24 hours.

Online Feedback Response

#6. Provide good product descriptions: If customers feel that your products aren’t as described online, they may file chargebacks. You should provide an accurate and honest description of goods on your website.

#7. Good billing descriptors: If your customer sees a billing descriptor and can’t immediately connect it to a purchase, they may call the bank and report it as fraud. Make sure your business name, website URL, and a brief description of the product purchased are included in descriptors.

#8. Keep up with orders: You want to keep your buyers informed at every stage of the customer experience with tracking information so they don’t think goods are lost in the mail, and dispute the charge.

#9. Optimise fulfilment: For the same reasons, you should minimise the time between customers completing orders and when goods are mailed to them. Optimising this process, while ensuring products are packed well so they don’t get damaged, will help prevent chargebacks.

#10. Respond promptly to cancellation requests: If you provide a subscription service, some customers will inevitably cancel it. Yet many believe this is a complex process, so they may just demand a chargeback instead. You must reassure buyers that you are easier to work with than banks before this happens, while making the process as simple as possible.

BONUS TIP: Go on the offense

When you experience a chargeback and have eliminated the possibility of criminal fraud or merchant error, the only remaining conclusion is that it is a case of friendly fraud. When this happens, you can try to recover your funds through chargeback representment.

And we can’t stress this point enough: you must challenge all chargebacks that you identify as friendly fraud. If you don’t, it can make you look like an easy target and leave you facing repeated instances that drain revenue. In fact, 50% of cardholders who successfully commit friendly fraud will do it again within 60 days. 

If you keep on top of friendly fraud by going through the representment process, it shows processors and issuers that you mean business. Having a good reputation with everyone involved in this process will make it more likely that your cases are handled with greater care.

For more top tips and recommendations, access Chargebacks911’s Holiday Handbook

By Monica Eaton-Cardone, Co-Founder and COO of Chargebacks911

Published 18/11/2020

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