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Holiday eCommerce: The 12 Days Before Christmas

Holidays  tip header

12 Tips to Help Prepare for Increased Sales and Additional Fraud This Holiday Season

As most of us know, “The 12 Days of Christmas” is an old carol that enumerates a series of increasingly grand gifts. Well, this holiday season, Chargebacks911® has a grand gift for you!

We’ve outlined 12 tips to help prepare your business for the increase in sales and onslaught of fraud.

In true kitschy-holiday fashion, we’ll break down our tips into actionable, day-by-day assignments to help address every phase in the chargeback life cycle.

first-1 Twelve Days Before Christmas: Check Your Return Policies

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Unfortunately, not everyone is a perfect gift-giver. There will be plenty of purchases made this holiday season that miss the mark entirely. In fact, studies show more than 20% of yearly returns (or $60 billion in merchandise) happen during the holiday season.

The return rate for items purchased online is three times higher than brick-and-mortar, as much as 50% greater for high-end merchandise.

Last year, the United Parcel Service handled about four million returns in the first full week of January. Considering online sales have increased 26% this year, that number will be significantly higher for 2016.

Merchants report about 30% of returned merchandise can’t be resold. That is a huge revenue loss for innocent businesses. However, tightening return policies can backfire. The more restrictive a return policy, the greater the chance of chargebacks and return fraud.

Ideally, merchants will be able to create a balanced policy, one that encourages sales without increasing the risk of chargebacks.

  • Clearly outline what will and won’t be accepted for a refund.
  • Promptly honor all qualified returns.
  • Ensure shoppers read and approve the terms and conditions before finalizing the sale.

11 Eleven Days Before Christmas: Increase Staff

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Do you need to hire more staff to accommodate the influx of sales? The following departments can easily be overtaxed during the holiday season:
  • Customer Service
  • Order Fulfillment
  • Quality Control

Double check the overall company culture. Is everyone happy? Are their needs being met? Is there any way you can improve the work environment?

10-tipTen Days Before Christmas: Establish Quality Control Policies

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Adhering to business best practices is the best way to reduce the risk of chargebacks and ensure a positive customer experience.

Some of the key components of quality control policies include:

  • New staff are properly trained and capable of adhering to the company’s quality standards
  • Orders are fulfilled and packaged accurately
  • Customer service calls are high quality and the connectivity is sufficient
  • Email responses are issued promptly
  • The website displays accurate information regarding product descriptions and inventory availability

9tip Nine Days Before Christmas: Check Fulfillment Processes

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Inform the order fulfillment department of advertised shipping and delivery timelines. Make sure they are able to meet or exceed the customer’s expectations.

Let customers know the last possible day they can do their shopping and still expect packages to arrive in time for Christmas. Work with your carriers to establish shopping cutoff dates. Then, strictly adhere to those deadlines.

Making last minute exceptions will just do more harm than good. In 2013, customers all across the US were furious with both the shipping providers and retailers because Christmas gifts failed to arrive on time. Merchants had extended holiday shopping dates without communicating with the delivery companies; as a result, the carriers weren’t able to cope with the last-minute, unexpected demand.

Each Christmas, FedEx employs approximately 300,000 team members (a 95,000 increase for the holiday season) to handle the delivery of 275 million packages. With such a heavy workload, it isn’t surprising that the system gets overtaxed.

Don’t be one of the retailers that consumers curse because you over-promised on order fulfillment and delivery.

8tip Eight Days Before Christmas: Enhance Customer Service

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Merchants must do all they can to ensure the customer experience is exemplary.

Increased transactions mean increased opportunities for dissatisfaction, complications, and inquiries. It’s time to beef up your customer service department:

  • Establish overflow facilities for customer service and offer 24/7 support.
  • Double check phone numbers and connectivity.
  • Communicate with customers through a variety of channels (online chat, email, phone, social media, etc.).
  • Ensure order confirmation emails are sent promptly.
  • Notify customers of any delays or backordered merchandise.
  • Customers who experience human engagement within four rings are three times less likely to file a chargeback.
  • Check call hold times.

7tip Seven Days Before Christmas: Check Fraud Filters

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Now is the perfect time to review your fraud filter rules and manual review process.

First, adjust your fraud filter rules. Review chargeback data to determine which items are the biggest draw for criminals and friendly fraudsters. Set your fraud filters to carefully monitor the sales of these items during the holiday season.

If the purchase of a targeted item is accompanied by other potential indicators of fraud, the transaction should not be processed without validation.

Also, if orders with similar characteristics are being flagged over and over, but approved in the vast majority of situations, adjust your rules.

Next, adjust your outlook on manual reviews.

The use of fraud filters is essentially a requirement for eCommerce merchants. However, many merchants lament that the automation still requires human involvement.

The LexisNexis® Risk Solutions 2015 True Cost of Fraud study found 75% of transactions flagged as fraud need a manual review and CyberSource reports each manual review takes between 5 and 10 minutes to complete.

To add insult to injury, overly zealous reviews can actually increase revenue loss—which defeats the original purpose of preventing revenue loss due to fraud.

It was recently reported that merchants lose $118 billion annually because of false declines. On the other hand, only $9 billion is lost to actual card fraud. That means merchants are losing $118 billion in an attempt to solve a $9 billion problem.

Because of the increased number of holiday transactions, many merchants fear an increase of fraud. This might induce them to tighten their protection.

However, more restrictive fraud filters will just increase the number of false positives and needless revenue loss. Rather than decline more transactions, increase your manual review team.

Manual reviews reduce false positives, increase revenue, and generate more loyal customers.

6tip Six Days Before Christmas: Increase AVS Security

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Take full advantage of AVS security during the holiday season by tightening your controls.

Rather than approve sales based on just a billing zip code match, only approve sales that have an entire address match. Manually validate any order that falls below your stringent requirements.

Also, note a common holiday occurrence: the majority of purchases will be made by one person and shipped to another. Any time the shipping address differs from the billing address, you must manually review the transaction.

5tip Five Days Before Christmas: Check Affiliate Fraud Patterns

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Affiliate marketing is a viable way to increase profitability—especially during the holiday season. Inclusion in popular gift guides and other holiday roundups can greatly increase traffic.

However, affiliate marketing only increases revenue if risks are kept to a minimum. The holiday shopping season offers prime earning potential for affiliates too, including those affiliates who choose to engage in unscrupulous marketing tactics.

Affiliate fraud decreases revenue and forces payment of unearned commissions. Additionally, fraud can easily lead to chargebacks.

To ensure affiliate marketing is a profit source, not a liability, you need to:

  • Estimate anticipated sales figures and be on alert if the actual numbers don’t follow the projection. Don’t celebrate unusually high figures; those transactions are all likely fraud and will be charged back. On the other hand, unusually low figures could indicate excessive false positives.
  • Focus on human whitelisting techniques more than automated blacklisting. However, you’ll still need a blacklist for fraudulent websites.
  • Carefully monitor website analytics. Things like bounce rate, dwell time, pages per visit will help you determine if the traffic is real or fake.
  • Use geolocation and device intelligence.

Chargebacks911 offers an innovative product to help ensure affiliate marketing increases revenue with minimal fraud exposure. If you’d like to learn more about the proprietary technologies and human forensics used to create Affiliate Fraud Shield™, contact Chargebacks911 today.

4tip Four Days Before Christmas: Sign Up For Alerts

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Several issuing banks have joined chargeback alert networks. These banks agree to alert merchants in situations where consumers are likely victims of credit card fraud.

Merchants have the opportunity to refund these customers rather than sustain this type of fraudulent chargeback, where every party loses as a result of criminal activity.

Sign up for chargeback alerts now. This will help protect your business from chargebacks that will be filed after Christmas. Legitimate fraud that was overlooked during the busy holidays will be disputed; alerts can help minimize risk in these situations.

If you’d like to learn more about chargeback alerts, contact us today. Chargebacks911 offers the broadest global protection and the industry’s only ROI guarantee.

3tip Three Days Before Christmas: Prepare For Returns

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When it comes to chargebacks, merchants are in constant competition with issuing banks. Who issues the quickest and easiest refund?

If you haven’t enhanced the customer service department to deal with pre-Christmas demands, you’ll definitely need to prepare for post-Christmas issues. If cardholders’ demands aren’t resolved in a satisfactory manner with your customer service department, they’ll turn to the bank for a no-hassle solution.

While returns are undesirable, they are preferable to chargebacks. Do what you can to encourage returns instead of bank-issued refunds.

  • You’ll need to contact customers a couple days after Christmas to gauge satisfaction. Try to resolve any conflicts before they are dire enough to demand a chargeback.
  • Customers are much more likely to admit their true feelings if you contact them through a third party. Devise an outreach strategy and get ready to implement it after the holidays have passed.
  • Each interaction your business has with customers increases loyalty. Loyal and satisfied customers are less likely to file friendly fraud chargebacks.
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 Two Days Before Christmas: Encourage Interdepartmental Communication

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With the excitement of the holidays nearly passed, departments need to be on their best behavior to handle impending customer concerns.

Everyone within the company needs to understand the overall goals and how individual contributions affect the whole.

Hold regular interdepartmental meetings and encourage open communication outside the formal gatherings. Evaluate emerging threats and devise workable strategies.

For example, the marketing department needs to know if a particular offer is increasing the risk of “not as described” chargebacks. Customer service needs to know if their hold times are decreasing customer satisfaction.

1tip One Day Before Christmas: Be Proactive

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Unfortunately, increased sales means an increased opportunity for chargebacks.

Chargebacks are usually issued on a 45-60 day chargeback cycle, meaning these disputes are tied to transactions that took place roughly one to two months prior.

As monthly statements start arriving and the full effects of the holiday shopping frenzy are revealed, merchants can expect an uptick in transaction disputes.

Legitimate fraud that was 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.

  • Don’t wait for customers to expose issues. Take a proactive approach to risk mitigation.
  • Review any pending issues or non-delivered items.
  • Devise a strategy to dispute illegitimate chargebacks and recover lost revenue.

Without proper risk mitigation strategies, holiday eCommerce activity can take a heavy toll on your bottom line. Take the necessary steps now to ensure this holiday season increases revenue, not liability.

If you’d like specific tips on how to create an effective risk mitigation plan, one that’s been customized for your business, contact Chargebacks911 today.


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Fight Fraud.

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