Retailers are getting ready for their busiest time of year, but more sales also bring more refunds and chargebacks. Can tech come to their rescue?
The holidays are almost upon us, and the 2017 season is set to be a big one for e-commerce. Adobe Holiday Insights has predicted that the 2017 holiday season will be the first to break the $100 Billion mark in online sales, yet it’s not all good news for online – and offline – retailers, as many of those sales will end up as refunds and chargebacks come January.
November and December larger volume of sales – especially around peak dates such as Black Friday and Cyber Monday – is always followed by a distressing spike in cardholder disputes and chargebacks. This is not only caused by fraud, but can also be triggered by customer confusion over seeing incomplete information on credit card billing statements. For both online and offline retailers, chargebacks mean incurring fees from card issuers and acquirers and losing holiday goods and associated shipping costs, as well as loss of reputation, future sales, and customer trust.
As consumers scrutinize the debt they’ve accrued over the holiday period, billing confusion and so-called “friendly fraud” – where customers experience buyer’s remorse and dispute a legitimate transaction – has become a costly problem. Customers often go directly to their card issuers to request a chargeback and obtain refunds, and this has serious consequences for merchants’ bottom line – as well as being a drain on issuer resources and detrimental to the overall consumer experience.
Technically, a consumer looking to dispute a transaction should first raise the potential issue with the retailer or service provider where they made the payment in the first place. However, a recent research by the analyst firm Aite Group found that card issuers often give customers varying degrees of leeway when it comes to accepting evidence for granting a chargeback. Their report shows evidence that this process has become easier and is often abused.
This is, as we’ve seen very bad news for merchants, but issuing banks also lose out in this process if they incur high chargeback volumes. There are solutions, however, that can significantly help towards mitigating that problem. At Verifi, we found that by inserting the issuer into the dispute process at the outset and arming them with the necessary robust data to prove both customer identity and intent of sale, we can effectively prevent the loss of millions’ worth of sales.
“Shared data can be beneficial in multiple fraud scenarios, and friendly fraud is no exception,” agrees the Aite Group’s Julie Conroy.
By leveraging technology and data, we are able to equip merchants and issuers with the right information, at the right place, and at the right time – sparing retailers the pain of losing out on thousands of legitimate sales this holiday season. This can not only safeguard those hard-earned seasonal sales, but also free up resources to tackle genuine fraud, improving efficiency, trust and the overall customer experience. Cheers!
By Matthew Katz, CEO of Verifi