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A Chargeback Carol

A Chargeback Carol

Learning from Chargebacks Past, Present, and Future

Let’s face it: it's nearly impossible for merchants to ignore the financial aspect of the holiday season.

While consumers may feel rather "bah, humbug"-ish about this, retailers know how high the stakes are: Black Friday is still the heaviest shopping day of the year, and stores on average sell more in Q4 than in any other time period.

With so much riding on holiday sales, it's easy to start feeling haunted by things that threaten your revenue stream...things like chargebacks. More frightening than Jacob Marley's ghost, chargebacks are enough to give even Scrooge the chills. They can be the ruin of merchants who try to ignore them.

But all is not lost: continue reading to see how visits from three "chargeback spirits" can help you make this the jolliest holiday ever.

The Ghost of Chargebacks Past

Here's the scary truth: the single largest source of preventable chargebacks is merchant error. That means if you've had to deal with chargebacks in previous years, you may be partially to blame.

Seemingly insignificant missteps and procedural oversights can account for as much as 40% of all chargebacks. Worse, if the procedural errors aren't corrected, those costly and unnecessary chargebacks will just keep reoccurring like a bad dream.

No one wants to think their system has holes, but with chargebacks, it's all too common. Once shipping procedures and return policies are in place, it’s easy to take an "if it ain't broke, don't fix it" attitude. Overall, the system works, right? What you may not realize, however, is that small bugs in the process can regularly cause customers to file chargebacks.

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There is some good news, however: identifying and correcting these types of errors is a fairly painless process. Chargebacks911® offers an exclusive 106-point Merchant Compliance Review that has been proven to boost quality control, provide in-depth policy analysis, and address procedural oversights.

You might not be able to change your past, but like Scrooge, you can take steps in the present to change the future.

The Ghost of Chargebacks Present

What about any chargebacks you might be getting now? How are you dealing with those?

For most merchants, how they deal with chargebacks is almost secondary to when they deal with them: the majority of merchants lose chargeback disputes primarily because they miss the filing deadline. And that problem is likely to get worse, since the new VCR requirements implemented this year tightened allowable response times even more.

With all of the restrictions, it might be tempting to forego disputing chargebacks altogether, especially in the heat of the overly busy holiday season. Doing so would be a mistake, however, since disputing chargebacks has long-term benefits, as well. In addition to recovering hard-earned revenue, disputing illegitimate chargebacks also helps reeducate cardholders.

When chargebacks go unchallenged, it conditions consumers to think there are no consequences for friendly fraud. That's why nearly half of the cardholders who succeed in filing an illegitimate chargeback will try it again within 90 days. If friendly fraud fails, on the other hand, consumers will more likely think twice before jumping to the dispute phase.

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Unchallenged chargebacks send a message to banks, as well: you're essentially saying, "I'm guilty."

Under the current system, banks tend to automatically side with their cardholders in a chargeback dispute. Unless you fight back, the unspoken conclusion is that the chargeback was legit, and therefore your fault. As more and more chargeback go unchallenged, it's easy for banks to start believing the problem lies with the merchant.

Challenging unjustified chargebacks reveals consumer behaviors, provides push-back to the banks, and introduces consequences to discourage further attacks.

The Ghost of Chargebacks Future

We don't need a crystal ball--or a disembodied spirit--to know one thing about the near future: merchants are going to get post-seasonal chargebacks for months after the holidays.

Once all the gifts have been opened and customers receive their credit card statements, a spike in chargebacks is almost guaranteed. Buyer’s remorse, overdue returns, and family fraud all may lead to inconvenient situations for customers. Purchasers might feel embarrassed, assume you won't take back an item, or simply view the return process as unnecessarily time-consuming. That can lead to a chargeback, as many consider it the same thing as a refund.

But Scrooge had the right idea when he asked, "Are these the shadows of the things that will be? Or are they shadows of the things that may be only?" In other words, does it have to be this way?

Some post-holiday chargebacks are probably inevitable, but a few simple steps can help you mitigate your risk:

Provide Clear and Transparent Policies

Chargebacks arise when customers can't find or don't understand a merchant's policies. Make all the necessary information easily and accurately located on your website—preferably in multiple locations. Double-check all information for accuracy.

Recognize the Warning Signs of Fraud

There's no certain way to spot fraudulent orders when they happen, but there are red flags you can watch for. New ordering or shipping locations, ordering from new devices, unusual orders, or multiple login attempts can all be indicators of fraudulent activity. Just make be sure you're not declining orders based solely on circumstantial evidence.

Double-down on Customer Service

Quality customer service is always important, but it's even more vital during periods of increased activity--like right after the holidays. You can optimize communication by providing live phone or chat support. Check that all published phone numbers are correct and working, and answer calls in three rings or less. All email or social media inquiries should be set up with an immediate auto-replay telling the customer when to expect a live response.

Start Planning Now

Now is the time to start fighting holiday chargebacks. Insist on security codes, use EVM readers when possible, and start collecting and filing shipping labels, carrier receipts, transcripts of customer chats or emails…any evidence to prove you followed protocol and acted in good faith. Gathering this information now is much easier than waiting until a chargeback is filed.

The Moral of the Story

The simple moral of A Christmas Carol is concise and concrete: it's never too late to change. Merchants don't have to be chained to chargebacks that have happened, are happening, or may happen in the future. Contact us today to discover for yourself how comprehensive chargeback management can free you from the past, provide more revenue in the present, and help you build for the future.


Prevent Chargebacks.

Fight Fraud.

Recover Revenue.