The revenue boost that comes from the holiday sales season cannot be denied. The cost of post-holiday sales chargebacks also cannot be denied. While the holiday season is the best season there is for merchants, once the holiday heyday is over it can be the costliest season.
Post-holiday sales chargebacks are a real thing. These chargebacks often come in the shape of true fraud, friendly fraud, and return fraud. There is no time like the present to improve your fraud and chargeback prevention program to prevent the pain of post-holiday sales chargebacks.
Proactive Real-Time Chargeback Prevention
Real-time chargeback prevention is a must during the holiday season (and all year-round). The goal for every merchant should be to maximize good sales and to prevent the post-holiday sales chargeback cycle. Remember, it’s not only fraud, it’s customer remorse that comes back to haunt merchants in the shape of ongoing fraud, friendly fraud and customer churn.
The tricky part to this is walking the fine line between a too rigid chargeback prevention policy and a too lax authorization policy. Many merchants become excited with the prospects of high sales numbers and neglect to monitor for high risk transactions. Merchants must know the who, what, when, where, how, and why of their customers. Maintaining as much customer and transaction detail as possible is key in keeping the good sales flowing and stopping the true fraud from happening.
The first step to the post-holiday sales chargeback prevention program features implementing a multi-layered fraud prevention technology.
- IP intelligence. Deep analysis of the IP Address used for the transaction to monitor possible risks associated with the location.
- Device fingerprinting. Uses device information and reputation scoring to validate the transaction.
- Address Verification Service (AVS). Verifies the address connected to the cardholder using a comparison look-up.
- 3D Secure. Uses a three-domain model to validate credit and debit card purchases.
- Tokenization. Account and card information is replaced with a secure token identifier.
- Geolocation. The location of the cardholder and the customer are compared.
- SSL. Provides a secure encrypted communication between customer devices and payment solutions.
- Merchant Co-Op. Transactions are compared against a list of orders, looking for matches with fraudulent accounts.
The holiday sales season is already complicated with new employees to train, extra stress on the website, increased customer queries, and more demands on customer service. All this adds up to more chances for fraudsters to slip through and affect an already overwhelmed manual chargeback process. Take cues from fraudsters and use advanced technology to stop fraudsters in their tracks. The more bad sales stopped at year-end, the lower the rate of chargebacks in the new year.
Returns Should Never Become Chargebacks
Many merchants neglect the power of their posted return/refund policy. This policy is the opportunity for merchants to help both themselves and their customers. Think of the customer who bought the wrong gift – now this customer simply wants to return the purchase. However, this may not be possible due to an overly rigid and limited return/refund policy.
Your customer may think they have no other choice than to file a chargeback. When this customer clicks Dispute Transaction, they’re probably not aware of the cycle that is about to be started. All they know is that they made a mistake and need to return the item. This return fraud is not a malicious act – the customer simply has no other recourse.
Enter the merchant and a special post-holiday return/refund policy. At this time of the year, and extending into the first four or five weeks of the new year, it pays to have a more open and flexible return/refund policy.
- Longer return/refund window. Increase the standard return/refund policy for holiday purchases.
- 24/7 customer service. Maintain extended customer service hours and staffing for the duration of the extended return/refund policy. Encourage customers to contact customer service with any problems.
- Proactive communication. Follow-up with customers who made purchases during the holidays. Remind them of the extended return/refund policy and give them the customer service contact information. Make it easy for customers to connect.
- Wiggle room. Merchants who allow their customer service team to use their best judgement with returns/refunds experience greater customer satisfaction and brand loyalty. Trust the customer service team to be flexible with the rules when it makes sense – especially if a chargeback is the only other option for the customer.
- Promote the return/refund policy. Merchants would do well to promote their special post-holiday return/refund policy just as they promoted their Black Friday, Cyber Monday, and Christmas Eve sales.
This special post-holiday sales approach to returns/refunds serves double duty for merchants. In the first instance, it makes it easier for customers to resolve their issues without filing a chargeback. In the second instance, these well-documented policies can be used as compelling evidence should a post-holiday sales chargeback occur.
Take Action Today
Being busy is not an excuse. Not knowing is not an excuse. Ready access to chargeback prevention experts is the solution.
You can take positive action to protect your business from the cumulative costs of post-holiday sales chargebacks. Contact us today to discuss how to maximize holiday profits and minimize chargeback losses.