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Delivery Confirmation & Chargebacks

Can Delivery Confirmation Help Prevent or Dispute Chargebacks?

Delivery confirmation offers a lot of benefits to you as a merchant. It’s proof that an order was sent and evidence of the time and place at which the order arrived. However, many merchants remain hesitant about whether it’s really a good idea.

With the boom in eCommerce, a growing number of customers already insist on discounted or free shipping. You could be (understandably) hesitant to add any extra perks that may increase costs. On the other hand, research shows that delivery confirmation can be an effective component of chargeback prevention and representment strategy.

In this post, we’ll look at different types of delivery confirmation available, and their potential benefits to you as a merchant.

What is Delivery Confirmation?

Delivery Confirmation

[noun]dəˈliv(ə)rē • känfərˈmāSH(ə)n

Delivery confirmation is a written or electronic notification received from a shipping provider. This notification informs the sender that a shipment has reached its final destination.

In simple terms, delivery confirmation is a note from your shipping carrier telling you that a package was delivered. That’s a good thing, but it’s important to note that delivery is not the same thing as the packing being received. As a merchant, you want to ensure that each order gets all the way to the intended recipient. This is important for customer satisfaction, as well as for your own liability protection.

Delivery confirmation comes in various forms. While there are pros and cons to each one, they all do the same basic job of letting you know that an order was delivered. By selecting the right type of delivery confirmation, you gain specifics as to when, where, and how the delivery happened.

This information is a crucial asset to help prevent or challenge chargebacks. Thus, you need to understand the different types to guarantee maximum benefit.

Delivery Confirmation

The most generic version of delivery confirmation is just that: confirmation of delivery. This value-added service ensures the merchandise was delivered successfully. It does not, however, prohibit the package from being re-routed, and in no way identifies whether the delivery address belongs to the actual cardholder. “Successful delivery” could mean the order was left outside somebody’s door, where a thief could easily snatch it.

Delivery Tracking

Delivery tracking is typically built into the overall fees of major shipping carriers. If a label is scanned in at the drop-off point, the information goes in the system and the shipment can be tracked, from pickup to delivery. Again, however, you get no guarantee that the order ended up in the purchaser’s hands.

The other downside to tracking is that fraudsters can do it, too. In fact, criminals might even use the information to retrieve a delivered package when the cardholder isn’t home.

Signature Confirmation

Some delivery options require an actual signature (either physical or electronic). If delivery was attempted but not successful, the customer may have to arrange for another attempt or go to a carrier location for pick up.

All major carriers offer some form of signature confirmation. Variations include Direct Signature Required (someone at the delivery address must sign) and Adult Signature Confirmation, where recipients must be over the age of 21. United Parcel Service (UPS) also offers Direct Delivery Only, where packages cannot be delivered to an alternate address without the sender’s permission, even by the delivery driver.

It’s easy to see why some people get confused about the benefits of delivery confirmation. The waters get even murkier, though, when we add the potential for chargebacks into the mix.

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How Merchandise Delivery Can Affect Chargebacks

We should talk a little about chargebacks themselves to help you understand how delivery confirmation fits into an overall chargeback strategy. There is one common chargeback reason impacted by the use of delivery confirmation: Merchandise Not Received.

There are numerous situations that could lead to a Merchandise Not Received chargeback. The most common claims include:

  • The merchant didn’t ship the order by the agreed-upon delivery date.
  • The merchant failed to send the order at all.
  • The merchant billed the cardholder before shipping the order.
  • The merchant didn’t make products available for pickup.

Any of these circumstances could be cause for a legitimate chargeback. But what if a cardholder falsely claims an order was never delivered? Under the existing chargeback rules, it’s your responsibility to disprove the cardholder’s claim.

It may seem unfair to push the burden of truth onto merchants, given that the cardholder is the one making the accusation. By the time the chargeback is actually filed, however, the bank has already investigated the claim and agrees with the cardholder…at least in theory.

In reality, banks often lack the resources to thoroughly vet every dispute. Many fraudsters are aware of this situation, which helps explain why they love to use this claim. Not only does the claim sound legitimate, but it’s also extremely hard to disprove.

For this reason, it’s important to arm yourself with any evidence that might invalidate a claim before it’s even filed. Delivery confirmation can help do that, in two ways:

Prevention

Prevention

Making the decision to ship orders with delivery confirmation can help deter premeditated acts of friendly fraud. This is especially true if you advertise that a signature will be required at delivery. Knowing that you will have evidence against them, friendly fraudsters may simply move their scam to a less-savvy retailer.

Providing delivery confirmation with tracking could help reduce non-malicious chargebacks, too. Many disputes are filed because consumers grow impatient, assume they’ve been victimized by a fraudulent merchant, and call the bank. Tracking allows them to see the reality of the order’s shipping journey.

Representment

Representment

Delivery confirmation provides credible evidence to help you dispute fraudulent chargeback claims through representment. Again, this is especially relevant in cases where a signature confirmation is required. In fact, a signature can benefit you, as well as your customers; if the cardholder actually signed for the delivery, you have tangible proof against friendly fraud. If the signature is clearly fake, cardholders have evidence to support a fraud claim.

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Delivery Confirmation for Digital Goods

“Merchandise Not Received” (or “Services Not Provided”) chargebacks are even more common for those selling digital goods. With no carrier service involved, proof of delivery is quite different…and often open to interpretation.

Merchandise Not Received claims fall under Visa’s reason code 13.1. According to Visa, the evidence required for representment is any “Documentation to prove that the Cardholder or an authorized person received the merchandise or services at the agreed location or by the agreed date.”

This vague description is both helpful and harmful. On the one hand, since nothing is spelled out, merchants have options when accumulating delivery confirmation proof. You can draw deploy:

Cloud-based activation

Cloud-based activation

This confirms delivery as soon as the consumer accesses the product key.

Built-in kill switch

Built-in kill switch

If the user files a chargeback, you can terminate access to the service or product.

Electronic signature page

Electronic signature page

Before use, the customers must indicate they have read and agree to the policies.

Two-step authentication

Two-step authentication

This texts a code to customers, asking them to verify account information.

Accurate recordkeeping

Accurate recordkeeping

Uses up-to-date data on IP addresses and other personal information for validation.

But, while any of these could be evidence of acceptance of delivery, Visa’s description is so broad that providing definitive, compelling evidence can be a challenge. Using multiple methods seems redundant; however, it offers greater protection in the end.

Thinking About the Big Picture

Delivery confirmation can help with recovering lost revenue and keeping chargeback rates in check. It can be especially helpful for big-ticket purchases and/or items delivered digitally.

That said, no single technique is 100% successful at preventing or disputing chargebacks. There are many points where the protection mechanism can break down. For example:

  • Carrier personnel can make mistakes.
  • Criminals can forge cardholders’ signatures or steal unattended packages.
  • Friendly fraudsters can make claims that are hard to disprove.

And again, the chargeback representment process is subjective. Evidence that’s considered sufficient at one bank may not be enough at another. In fact, opinions can vary even within a single issuer’s chargeback department. Finally, while delivery confirmation can play an influential role in preventing and disputing this type of chargeback, there are many other reason codes you need to worry about.

You can’t expect piecemeal chargeback management implementation to be effective. You have to analyze your overall goals and objectives, then create a long-term strategy for reducing chargebacks and recovering lost funds.

The experts at Chargebacks911® can create a custom comprehensive chargeback management solution suited to the unique needs of your business. Contact us today for a free chargeback analysis and see how much you could save.

 

Prevent Chargebacks.

Fight Fraud.

Recover Revenue.