How to Prepare for Chargeback Day 2020
If history repeats itself, merchants can expect an influx of chargebacks on January 14.
Ecommerce analysts have dubbed the second Tuesday in January ‘Chargeback Day’, when the highest number of chargebacks are filed for the year. If history repeats itself, merchants can expect an influx of chargebacks on January 14, 2020.
Even with the short holiday shopping season in 2019, industry analysts predicted1 that sales would rise by 3.8% year over year, making 2019 the first-ever trillion-dollar season. Moreover, in the U.S., retail Ecommerce alone was estimated to rise 13.2%, to $135.35 billion.
However, a sharp increase in shopping may very well translate to an increase in consumer-initiated chargebacks. Take these steps to prepare your business for Chargeback Day 2020 and minimize losses to chargeback fraud.
How to prepare for Chargeback Day 2020
1. Know Your Rights.
Merchants have a number of rights in chargeback situations, including the right to know the reason for the chargeback; a waiting period to process returns; and the right to dispute a chargeback that appears fraudulent. Understanding your rights in the event of a chargeback is the first step in protecting your business from excessive, fraudulent chargebacks.
Related reading: Guide to Credit Card Chargeback Merchant Rights
2. Be Prepared for Returns.
Retailers are expected to see a record number of holiday returns this year, with an anticipated 26% increase year-over-year, reaching 1.9 million total items returned. This volume of returns can be overwhelming for retailers, requiring resources to ensure that returns are processed correctly and fraud is identified and if possible, blocked.
To get ready for an increased volume of returns, consider:
- Staffing. CX staffing levels should be maximized throughout January, to ensure that employees are available to assist customers with returns. Retaining personnel from the holiday shopping season can ensure teams have enough resources to properly handle the volume of chats, e-mails, and phone calls.
- Training. Staff should be knowledgeable in all types of returns, and empowered to process returns and resolve customer issues on the spot.
- Policy. Your store’s return policy should be clear, comprehensible, and well-publicized. Sales terms and conditions should be optimized to protect you from chargebacks, and enable stronger compelling evidence in case of representment.
3. Optimize Customer Service.
A higher volume of purchases, returns and chargebacks means that contact with retail customer service representatives will increase accordingly. And customer service is incredibly important to retaining customers and improving customer satisfaction. A recent survey found that 42% of customers that lodge a complaint on social media expect a response2 within the hour. Without the resources for a fast, effective response a company can lose customers, or be subject to a larger number of chargebacks: in fact, 81% of consumers admit3 to filing a chargeback out of simple convenience.
4. Flag Repeat Offenders.
Roughly 40% of customers that commit friendly fraud chargebacks will do so again within 60 days. Identifying these customers and blocking them from future purchases is an excellent first-level of defense against continued losses to fraudulent chargebacks.
5. Specify Parameters for Possible Representment.
It doesn’t make financial sense to dispute all chargebacks. Decide ahead of time which ones you want to fight – using transaction value or identifying chargebacks that will require the least resources to dispute as a guide for representment.
Related reading: The Complete Guide to Visa’s New Chargeback Limits
6. Review Chargeback Reason Codes.
If you haven’t already, accumulate and review data that speaks to the nature of each chargeback filed. A customer must select a reason code when filing a chargeback, and these reasons are available to merchants. Analyzing this information can help identify the actual – or underlying – reason for chargebacks, to help address the root cause and prevent them in the future.
For example, if a retailer notices that a large number of chargebacks are occurring due to delivery issues, they may want to reconsider the agreements in place with shipping companies, or promises made to customers. If chargebacks are occurring due to fraud – or if the number of fraudulent chargebacks is increasing, a company should review its fraud prevention strategies, as they are likely in need of an upgrade.
If chargebacks are affecting your company’s revenues, or if fraudulent transactions are increasing, consider a comprehensive, multi-layered, advanced fraud detection and prevention solution. Precognitive uses device intelligence, behavioral analytics, and decision-level AI to detect and prevent fraudulent transactions before they happen.
Get in touch with Precognitive to learn more about chargeback prevention, or schedule a comprehensive merchant assessment with one of our fraud prevention experts.