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Are Retailers Ready to Handle Waves of Holiday Sales Returns and Chargebacks?
By Dennis Kaiser
United Parcel Service expected more than one million returns per day in December, and 1.3 million on Jan. 3 thanks to an immense amount of holiday spending in 2018. All of these returns can cost merchants millions in chargebacks and consumer fraud. Disputes and chargebacks caused by U.S. consumer disputes will result in more than more than $31 billion in losses, with merchants sharing almost $19 billion of the overall costs, according to a report, The Chargeback Triangle, by Javelin Strategy & Research.
Suresh Dakshina, president at Chargeback Gurus Inc., an industry leader in chargeback and fraud mitigation services, said that chargebacks have numerous hidden costs. “When it comes to online fraud during the holidays, it’s not just the cost of transaction merchants lose when they incur fraud. It is estimated that merchants lose up to three times the transaction cost, considering their product, fulfillment, marketing and operations costs.”
Dakshina said that balancing chargeback protection with fast approvals can be daunting, especially for merchants who are afraid of losing sales. Fortunately, there are tools that can help fight fraud and chargebacks. Tips and resources include:
- Secure authentication: Activate AVS/CVV match features in payment gateways to avoid fraudulent orders.
- Scrutinize rush orders: Review overnight orders closely; fraudsters know that merchants who rush to deliver products may bypass security measures.
- Review large, multiple orders: Flag unusually large or multiple orders that originate from the same customer, as well as unusual international orders.
- Address verification: If an order looks suspicious, call the customer to verify phone number, email and physical address.
“Merchants today are stuck in a bind where they must make every effort to detect and avoid fraud, while being careful not to overzealously decline legitimate transactions or allow the costs of fraud prevention to harm their profitability,” Dakshina said.
For comments, questions or concerns, please contact Dennis Kaiser
