6 Ways to Reduce Chargebacks and Fraud this Holiday Season

by Suresh Dakshina on Dec 3, 2015 5:30:00 PM DRTV, Retail, Support Services

6_Ways_to_Reduce_Chargebacks_and_Fraud_this_Holiday_Season-604184-edited.jpgThe holiday shopping season is here. Phones will be ringing and e-commerce sites will be flooded with buyers searching frantically for that unique gift. It’s the perfect environment in which fraud can thrive unless businesses carefully examine their protocols and policies to ensure a successful holiday shopping season.

By following these six easy tips, businesses can stay ahead of the curve, and in the black, this holiday.

1. Activate AVS (Address Verification Service) in the payment gateway.

This is not for the customer so much as it is for the retailer and marketer. Credit card fraud runs rampant during the holidays, so it is in the best interest of the retailer/marketer to check addresses prior to fulfilling orders. An automated fraud program will reduce fraud in the card-not-present areas of sales and reduce a company’s liability against chargebacks.

The AVS is fairly straightforward: it checks the address entered into the billing/shipping boxes against the most recently registered address for the card’s issuing bank records. In order for the program to work effectively, merchants need to ask customers for both their billing and shipping addresses. If companies ship products exclusively to the AVS-verified billing address of the cardholder, as opposed to an alternate shipping address, they can significantly increase the odds of winning a chargeback if the customer claims the transaction to be "fraudulent.”

2. Implement protocols to ensure all orders are shipped within 24 hours.

During the holiday rush, people want their packages almost immediately. While most online retailers can’t be as quick as say, Amazon Prime Now, they can streamline their order and delivery process by shipping all orders out within 24 hours. The quicker the product is shipped, the quicker the customer receives it. Most importantly, the order isn’t sitting in the warehouse queue slowing down logistics.

Make sure shipping details are clearly visible on your website. If your customer knows when they can expect to receive their merchandise, they will be less inclined to issue a chargeback because they feel it has been too long or fear their order may have been lost or stolen.

3. Ship all orders with a tracking number.

On average, FedEx loses about 0.55 percent of packages, while UPS is estimated at about 1 percent and USPS at around 1.2 percent. By shipping each shipment with a tracking number, retailers can make sure their customers packages arrive on time to the proper locations. Tracking numbers offer customers peace of mind during the mad dash of holiday shopping in seeing their packages at the local post office or sorting facility.

Theft during the holiday season is also a concern. Shipping items with tracking numbers allows customers who live in apartments, condominiums, or other communal housing to know when their packages were delivered and if they do not receive them, they can file charges with the proper authorities.

4. Create procedures for fulfillment center to track product returns and wrong shipments.

Nothing is worse than receiving a package but having it be the wrong size or item. This is especially the case during the hectic holiday season. Ensure customers are receiving the proper shipments by creating protocols for warehouses, distribution and logistics to deliver packages correctly the first time.

Should mistakes be made, proper procedures can guard companies against return fraud, credit card fraud and chargebacks. Managing each return will help eliminate dishonest customers who claim to have never received the item or that they sent the incorrect item back to the company they originally purchased from, but the company never receives it.

5. Make frequent purchases on your website to ensure orders are delivered on time.

The only way to fully know that purchases are being processed and delivered in a timely manner is to conduct test purchases. By regularly making purchases on a company’s own website, managers can see exactly what goes on during the fulfillment process and help close any gaps they might find.

6. Create steps to identify and fix orders with invalid addresses and re-ship orders on time.

People have enough to worry about, so they shouldn’t have to worry if their incorrect order will be received in time to gift to someone. Make sure the people in charge of fulfillment check each and every package. When a mistake does occur, they need to quickly exchange the incorrect merchandise for what was originally ordered.
While this may not protect a business in the case of fraudulent orders, it may help a dispute with legitimate customers who say they never received the package. For expensive items, always require a signature to ensure proper delivery.

Chargebacks and online fraud are an unfortunate aspect of retailing, but if businesses take a hard look at their ordering processes and protocols, they can combat the chargeback Grinch.

Photo by David Castillo Dominici/FreeDigitalPhotos.net

Suresh Dakshina is the Co-Founder of Chargeback Gurus.




Suresh Dakshina's blog
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