The 2021 holiday season has come and gone, and people across the country are deciding what to do with gifts from friends and loved ones. It's an important season for retailers, including both brick-and-mortar establishments and online stores.
While the holiday season is certainly a lucrative time for merchants, the inevitable holiday hangover of chargebacks is less welcome. Some companies report that dispute volumes rise by 40% or more in January, compared to November and December.
What's happening? Some people are going to try to return products, including gifts. Instead of going through a merchant's dispute process, some will try to get a chargeback.
Bad actors will also increase their activity, attempting to keep products and abuse chargebacks so they can keep their money too. In other words, they're committing "friendly" fraud.
Merchants have a few options to deal with these challenges, including chargeback management software. The right chargeback management solution makes fighting chargebacks easier by automating much of the work and offering a centralized dashboard where you can track your disputes.
With that said, let's look at some ways you can reduce the pain and hassle of holiday chargebacks.
1. Make sure your return policy is clear and simple to understand.
Before talking about chargebacks, let's discuss return policies. Some customers turn to chargebacks because they can't navigate a company's legitimate return policy. Frustrated and wanting their money back, they turn to their credit card processor and ask for a refund.
As a business, you want to reduce returns. They decrease revenue and cost money to process, and illegitimate returns unfairly punish your company. A return is still better than a chargeback, though. If you suffer too many chargebacks, your payment processor may charge you higher fees or simply stop working with you.
So, make sure customers can easily access and understand your return policy. Ensure that it's fair to them and also to your business.
2. Understand the chargeback representment process.
You have some options at your disposal for fighting holiday chargebacks. The most important option is the chargeback representment process, which allows you to fight and potentially fend off chargebacks. Chargeback representment is a tightly regulated process that gives you a second chance to get paid.
Through the process, you will "re-present" the transaction to the banks. You dispute the chargeback by providing evidence that a legitimate sale was made and that you're being unfairly deprived of funds.
You may provide the bank with sales receipts, order forms, signed delivery paperwork, and a copy of your return policy (to argue that the customer had other options besides a chargeback), among other things. Any customer communications, such as emails, or evidence that the customer accessed your site may also help your case.
3. Remember your deadlines.
Generally speaking, you only have 45 days or so to dispute a chargeback. This means you need to act quickly and keep any important dates at the front of your mind. A lot of companies fail to dispute chargebacks not because they lack the compelling evidence, but because they forgot to submit their case on time. Don't be that company.
One of the best benefits of a chargeback management platform is that it helps you track deadlines. You'll see when important dates are approaching and can act accordingly.
4. Focus on fighting the most valuable chargebacks.
Not all chargebacks are created equal. Some, quite simply, are worth more money than others. Even if you use automated management solutions, you should prioritize your chargebacks, putting the most valuable ones at the top of your list.
Let's say you've got a $20 chargeback and another worth $200. If all other things are equal (such as your chances of successfully refuting each chargeback), you should obviously focus on fighting the $200 one.
When you're fighting chargebacks, time is limited. After you work your way through the most valuable chargebacks, you can start refuting the less valuable ones.
5. Fight the chargebacks that you can win.
You stand a better chance of successfully disputing some chargebacks than you do with others. For some, you might simply have more evidence that the charge was legitimate. You may increase how much you recoup and reduce headaches by focusing on the chargebacks you're most likely to fend off successfully.
Your success in combating a chargeback often comes down to your documentation. Can you prove that a customer received a certain item and that it was a legitimate purchase?
Let's say you're fighting two different chargebacks worth roughly the same amount. With one, you have a signed delivery receipt. With the other, there's no signed receipt. In this case, you should focus on the chargeback with the signature. Set yourself up for success by fighting chargebacks where you have a strong case.
6. Train your staff.
Bring your staff up to speed on chargebacks, why they occur, how to reduce them and how to fight them. You should train the relevant staff members on how to use your chargeback management platform, how your refund process works, and how to recognize signs of potential fraud.
7. Use a chargeback management platform.
Verifi, a Visa solution, and Mastercard's Ethoca provide merchants with tools that make it easier to reduce chargebacks. However, properly disputing them can still be a pain. As you rush to deal with post-holiday return volumes, your resources may be stretched to the limit.
It's important to be as efficient as possible. This is where a chargeback management platform comes in. With this platform, you can automate much of the work, such as gathering data on a sale, evidence that the customer received the product, and other information, including upcoming deadlines and other important dates.
Through automation and other features, a chargeback management platform reduces the time you spend fighting each chargeback. The right charegback management provider may also help you identify the chargebacks you're most likely to refute successfully and the value of each one.
By optimizing your workflows and making it easier to gather and organize data, chargeback management tools put you and your staff in a better position to succeed. This way, a good chargeback management platform will quickly pay for itself.