Chargebacks911’s release of its proprietary chargeback guide for businesses and financial institutions comes just after online spending on Black Friday reached $9.12 billion in 2022. According to Adobe Analytics, this represents a 2.3% increase from the previous year.
View the guideAdditionally, preliminary data released by Adobe Analytics show consumers spent approximately $11.3 billion on Cyber Monday. With merchants focused on keeping up with the increase in sales and the fact that chargebacks typically don’t occur until 60 to 90 days after purchase, experts at Chargebacks911 are advising companies to avoid becoming complacent and to prepare themselves for an influx of transaction disputes early next year.
“With the holiday shopping season well underway, we're already seeing American spending approaching pre-pandemic levels,” said Monica Eaton, founder of Chargebacks911. “Merchants should be aware of the rise in chargebacks and other transactional disputes that often accompany card-not-present transactions, particularly during the holidays.”
Another Adobe report forecasts national online holiday sales between Nov. 1 and Dec. 31 to reach $209.7 billion — an 11.1% increase since 2020. With the increase of virtual holiday shopping, a correlated rise in chargebacks and other transactional disputes are expected to hit merchants throughout the first quarter of 2023.
Even with a system in place to differentiate between legitimate transactional disputes and those considered fraudulent, U.S. retailers could lose millions of dollars in illicit chargeback refunds, according to Jarrod Wright, Vice President of Marketing for Chargebacks911 and author of this year’s Geek’s Guide to Chargebacks.
“While some companies might have automated chargeback solutions in place, many of these products don’t account for the seasonality of shopping trends,” said Wright. “Systems without machine learning typically can’t adapt to the temporary spike in sales during the holidays. That means more fraud will get through, causing a surge in chargebacks weeks later.”
Prior to approving a transaction, Chargebacks911’s machine-learning technology compares incoming information to historical data, allowing the merchant’s transactional system to “learn” the company’s chargeback trends – including atypical scenarios, such as holiday sales – and adjust its mitigation processes accordingly.
According to the 2023 Geek’s Guide to Chargebacks, Chargebacks911’s most downloaded in-house report, a chargeback is a forced transaction refund conducted by the issuing bank on the cardholder’s behalf. The merchant must then either provide evidence that the customer’s claim is invalid, or be subject to fines and fees in addition to losing the cost of the sale.
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