These Terrifying Chargeback Stats Could Haunt You Well Past Halloween
What scares you most? Vampires? Mummies? A zombie apocalypse? If you’re like most eCommerce merchants, the monster in the closet takes on a completely different form: chargebacks.
Those unexpected payment reversals threaten to sap your revenue, steal your merchandise, slam you with unnecessary fees, and even jeopardize your business’s future. How bad is it? Well, according to the LexisNexis “True Cost of Fraud” study, each dollar of fraud actually cost retailers $2.94 in fees, lost merchandise, security, redistribution, and other ancillary costs. That’s up 6% from last year.
"It's Alive! It's ALIVE!"
A transaction should be over once you process and ship the order, right?
It'd be nice to think so, but chargebacks can haunt you long after you lay a sale to rest. These disputes rise from the grave to drain the life out of your bank account. Take a look at these statistics to see just how scary fraud and chargebacks can be:
The share of total business revenue lost to fraud jumped 14% between 2017 and 2018.
The average merchant lost 1.8% of total revenue to fraud in 2018, up from 1.58% lost in 2017. The average volume and value of fraudulent transactions has also eerily risen.
The average merchant suffered 306 successful fraudulent transactions per month in 2017.
Merchants are outnumbered: they're hit with some 600 fraught attempts every month, of which half are successful. For each successful criminal fraud attack, a chargeback will likely follow.
Of the world’s 100 biggest eCommerce sites, 72 had three or more errors in checkout flows.
Checkout errors can increase shopping cart abandonment, false declines, and customer frustration. We’ve also identified merchant error as a primary contributor to chargebacks.
86% of all chargebacks are probable cases of friendly fraud.
Merchants are faced with a horrifying reality: the highest percentage of their losses come from friendly fraud, which is difficult to identify and nearly impossible for merchants to prevent.
81% of customers admit to filing a chargeback out of convenience.
Most customers can’t see any difference between a chargeback and a standard return. They don’t know—or don’t care—how a chargeback can slash a merchant's livelihood.
A customer who successfully files a chargeback is nine times more likely to file another one.
The ease of successfully filing a chargeback emboldens the evildoer to try again. Legitimate customers can become serial friendly fraudsters.
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40% of customers who file a chargeback will file another one within 60 days.
Once customers acquire a taste for easily-filed chargebacks, they usually return to the scene of the crime. Half of all people who file a chargeback will do it again by the 90-day mark.
Nearly half of large retailers do not use autofill correctly.
Autofill can help drive conversion rates, but errors can cause a ghastly jump in shopping cart abandonment--not to mention creating additional checkout errors that will cause chargebacks.
60% of all credit card fraud attempts in eCommerce channels were successful in 2016.
Overreliance on a limited handful of tools--as opposed to embracing the safety of a multilayer fraud solution--can create nightmares by giving criminal fraudsters a frightening advantage.
Merchants only hear from 4% of dissatisfied customers.
Here's a grim statistic: only 1 in 20 customers will call and complain if there is an issue with their order. The remaining 19 are at risk of filing a chargeback.
Chargebacks increase 41% every two years.
Our proprietary research shows a chilling YoY increase in chargebacks. The issue will only get worse as this chargeback plague spreads to other markets like the EU, Japan, and China.
Chargebacks will cost merchants close to $30 billion by 2020.
Chargebacks cost merchants more than $19 billion in 2017. At the current rate, the financial impact chargebacks have on retailers will approach $30 billion a year by the end of the decade.
As these terrifying truths reveal, chargebacks are one of the greatest threats facing modern eCommerce. Of course, they’re not the product of some ancient curse, alien invaders, or poisoned fangs: most result from friendly fraud.
Friendly fraud disguises itself as a valid transaction to fly under the radar. Then, long after you think the transaction is dead and buried, the cardholder files a claim. The person might assert the merchandise was not as described, that they never received the item, or any number of other potential triggers, then demand a chargeback.
You lose the revenue from the sale, the merchandise, and the cost of shipping. You get hit with an additional fee to cover chargeback administration. You face the prospect of landing on the MATCH list and losing the ability to process cards, potentially dooming your business. It's enough to make a merchant want to scream.
Break the Chargeback Curse
Friendly fraud is a monster…and it can’t go unchallenged any longer. That’s why our experts at Chargebacks911® recommend a two-fold approach:
- Identify the source of your chargebacks.
- Prevent friendly fraud through tactical representment.
But when friendly fraudsters hide behind seemingly valid transactions, the only way to detect them is with the help of a knowledgeable and experienced chargeback analyst.
Chargebacks911 offers services and support that no other merchant in the chargeback mitigation space can promise. Our proprietary technologies and expertise provide the industry’s first and only way to both identify and fight chargebacks:
Intelligent Source Detection (ISD) is our award-winning solution for identifying the truth behind each chargeback. ISD looks behind the reason code, deploying a patented combination of machine learning and human forensics to help you reduce costs and lower false positives.
Once you find the source of friendly fraud, you can fight back with Tactical Chargeback Representment. Our innovative approach gives you the power to recover revenue, prevent second chargebacks, and allocate resources more effectively. Even better, our services are backed by a 100% guaranteed ROI!
Who You Gonna Call?
It's not witchcraft or sorcery. There are plenty of simple actions you can take to ward off merchant error and criminal fraud chargebacks.
Let’s be honest, though: managing friendly fraud isn’t your job. You should be focused on growing your business. You want the industry’s top friendly fraud experts on your side if your business is going to make it through the night.
Don’t let chargebacks haunt your business. Call Chargebacks911 today, get your free demo, and discover how much you could save.