12 Tips to Help Prepare for Increased Sales and Additional Fraud This Holiday Season
‘Tis the season … for fraud, that is. As holiday shopping heats up, crooks are busy making fraudulent purchases, hoping that retailers won’t notice amid the blizzard of legitimate sales.
As most eCommerce merchants know, today’s fraud leads to tomorrow’s chargebacks — as surely as Rudolph leads Dasher, Dancer, and the rest of the team.
Is there any way merchants can protect themselves from this onslaught of criminal activity? We’re glad you asked! We’ve put together a list of 12 tips to help prepare your business for the increase in sales and potential chargebacks.
In true kitschy-holiday fashion, we’ll use the “The 12 Days of Christmas” trope to break down our tips into actionable, day-by-day assignments you can use all through the holiday season and beyond.
12 Days Before Christmas: Fine-tune Your Returns Policy
There’s no way around it: you will get returns after the holidays. Not every gift will be perfect; in fact, the National Retail Federation expects 11-13% of holiday purchases to be returned after the new year.
Overall, 8.75 million holiday gifts are expected to be shipped back to stores. UPS estimates that 1.3 million or more packages will be returned on January 3 alone. In 2020, the estimated value of returned gifts came to $101 billion.
Merchants report about 30% of returned merchandise can’t be resold. That’s a huge revenue loss for businesses, but simply tightening your return policies can backfire. A complicated return policy will not result in fewer returns; more likely, it will simply encourage customers to bypass your system by filing a chargeback.
Take a hard look at your current return protocols, to see if they need adjusting. Ideally, you should try to create a balanced policy, one that encourages sales without increasing chargeback risk:
- Clearly outline what will and won’t be accepted for a refund.
- Promptly honor all qualified returns.
- Offer multiple return options (exchanges, money back, in-store credit, etc.)
- Provide free return shipping
- Ensure shoppers approve terms and conditions before finalizing the sale.
11 Days Before Christmas: Get Your Team Ready
You may need additional employees to accommodate the influx of holiday sales. With the ongoing labor shortage, however, extra elves may be difficult to find this year. So, it’s even more important to make sure all your staff members—new and existing—are pulling together as a team.
Customer Service, Order Fulfillment, Quality Control, and many other departments can easily be overtaxed during the holiday season. Be clear on what is expected of everyone, including interdepartmental coordination, efficient service, and helpful attitudes.
At the same time, check your overall company culture. Is everyone happy? Are their needs being met? are there ways you can improve the work environment? As much as possible, problems should be resolved before the season is in full swing.
10 Days Before Christmas: Do a “Fulfillment Walk-Through”
You can’t afford order-fulfillment issues during the holiday rush. Walk your team through each step of the fulfillment process, from ordering to shipping.
Set realistic timelines for shipping and delivery … then strictly adhere to them. Let customers know the last possible day they can do their shopping and have their orders arrive in time for Christmas. Work with your carriers to establish shopping cutoff dates.
Be careful not to over-promise. Shipping companies have not completely recovered from the surge of pandemic-based delivery demands. Making last minute exceptions will do more harm than good.
9 Days Before Christmas: Tighten Quality Control
Especially for eCommerce, quality after the actual sale needs to be an integral part of the fulfillment process. Adhere to “best practices” to ensure each order is handled professionally. Some of the key components of quality control policies include:
- Properly trained staff
- Accurately fulfilled and securely packaged orders
- Addresses and contents double-checked before shipping
- All customer inquiries answered promptly
- Accurate information regarding product descriptions and inventory availability
This last item is particularly important this year, given the global supply-chain issues. According to CNBC, online “out-of-stock messages” are expected to be up 172% this holiday season, compared to 2020 numbers.
8 Days Before Christmas: Open Up Your Payment Options
The growth of eCommerce has given rise to a variety of new payment options. Digital wallet use, for example, jumped nearly 24% YoY in 2020. The total amount spent through digital wallets is expected to top $10 trillion annually by 2025.
Other online payment options growing in popularity include:
- Buy-now-pay-later (BNPL)
- Real-time payments (peer-to-peer)
- Automated clearing house (ACH) transactions
- Digital currency
Talk to your processor about integrating more payment methods into your checkout. Offering expanded payment options aligns your business to the needs of more customers.
7 Days Before Christmas: Adjust Fraud Filters
If you’re using fraud filters, and you should be, now is the perfect time to review filter rules and your manual review process.
First, check chargeback data to determine which of the items you sell are the biggest draw for criminals and friendly fraudsters. Adjust your fraud filters to carefully monitor the sales of these items during the holiday season.
Be careful of setting the parameters too tight, however: False declines—legitimate orders rejected for possibly being fraud—cost US merchants nearly $34 in lost sales for every $1 in “prevented” fraud.
By the same token, if orders with similar characteristics are being consistently flagged, but are approved upon review, your rules should reflect this. You want to do as few manual reviews as possible, especially when you’re busiest.
That said, some manual review will always be necessary, even with advanced automation. Manual reviews reduce false positives, increase revenue, and generate more loyal customers.
6 Days Before Christmas: Increase AVS Security
Address Verification Service (AVS) helps reduce risk by automatically checking the billing address listed in the transaction against the address registered with the issuing bank. Non-matching data could indicate fraud.
Unfortunately, holiday purchases are commonly made by one person and shipped to another. Fraudsters know this; they also know you’re extremely busy at this time of year, and more likely to miss potential fraud.
Your safest bet is to tighten AVS controls for maximum fraud protection. Rather than automatically approving sales based on just a billing zip code match, require an entire address match for approval. If the shipping and billing addresses differ, manually review the transaction.
5 Days Before Christmas: Enroll in Alerts
A great number of issuing banks have joined chargeback alert networks. These banks agree to alert merchants in situations where consumers are likely victims of credit card fraud. You’ll have the opportunity to issue a refund rather than get hit with a chargeback.
To take advantage of this service, you need to be enrolled in one or more of the networks. It’s important to sign up now, however, to help protect your business from post-holiday chargebacks.
Chargebacks911® offers the broadest global alerts protection available, as well as the industry’s only performance-based ROI guarantee. If you’d like to learn more, contact us today.
4 Days Before Christmas: Polish Up Your Customer Service
Your customer service representatives are often the “first contact” between your customers and your business. Providing friendly, helpful customer service is always important, but never so much so as during the holidays.
Increased transactions mean more opportunities for dissatisfaction, complications, and frustrations. Your customer service department staff should be designed to put the customer first. Here are some tips:
- Offer 24/7 customer support.
- Check all contact points (phone numbers, email addresses, etc.) for connectivity.
- Communicate through multiple channels (chat, email, social media, etc.).
- Send order confirmations and other communications when expected.
- Promptly notify customers of delayed, out-of-stock, or back-ordered merchandise.
- Answer phones within three rings, preferably with a live representative.
3 Days Before Christmas: Put It in Writing
The best way to guarantee that everyone knows their role is to establish a clear plan, and put it in writing. Document the steps for approving or declining orders. Print out lists of criteria for spotting suspicious transactions. Outline the process for manual reviews.
All staff should have access to this information and understand that they are responsible for knowing and practicing it. This means you have multiple parties on the lookout for fraud, all through the ordering process.
2 Days Before Christmas: Switch to “Returns” Mode
The holiday buying is mostly done. Now it’s time to turn things around and get ready for returns.
And the returns will come; we’ve established that. How you handle them is every bit as important as your pre-holiday customer service. After weeks of festivities, consumers are likely to be stressed and cranky. If their demands aren’t resolved to their satisfaction, they’ll turn to the bank for a no-hassle solution.
While returns are undesirable, they’re preferable to chargebacks. Do what you can to encourage returns instead of bank-issued refunds. Contact customers to gauge satisfaction. You may want to reach out through a survey company, as people will often speak more frankly to a third party.
Try to resolve any conflicts before they turn into disputes. Approach each customer interaction as an opportunity to personalize your relationship and increase loyalty.
1 Day Before Christmas: Be Proactive
Increased sales means an increased risk of chargebacks. And the best thing you can do is start getting prepped for them now.
Chargebacks are usually issued on a 45–60 day cycle, meaning they’re often tied to transactions that took place one to two months prior. As cardholders start receiving their monthly statements, merchants can expect an uptick in transaction disputes.
Fraud that got overlooked during the busy holiday festivities will be disputed. Friendly fraudsters will file illegitimate chargebacks to reduce debt. And accidental chargebacks will be filed for forgotten purchases.
Without proper strategies in place, holiday eCommerce activity can take a heavy toll on your bottom line. Don’t wait for trouble to start, take action now to ensure this holiday season increases revenue, not a liability.
If you’d like specific tips on how to create an effective, customized risk mitigation plan, contact Chargebacks911 today.