Although the holidays bring merchants greater prosperity and increased revenue; however, they also increase the likelihood of chargebacks and fraudulent transactions. For example, 40% of annual chargebacks are traceable to purchases made between Thanksgiving and New Year’s Day.
Given that most holiday gift purchases are still conducted online, this further exposes retailers to chargebacks (both legitimate and fraudulent) and other forms of financial fraud.
Actual fraud, friendly reimbursement, and reimbursement are frequent types of chargebacks. It is time to bolster your chargeback and fraud protection program in order to prevent the inconvenience of chargebacks following the holiday season.
But what exactly are Post-holiday Chargebacks? Let's find out.
What Are Post-holiday Chargebacks?
After the holiday cheer has faded, merchants may still feel its effects through post-holiday chargebacks. Unpleasant surprises could happen when cardholders choose to dispute transactions with their banks, asking for refunds and reversing charges. Any time of year is fine for chargebacks, but they tend to spike right after the holidays. As if dealing with administrative issues wasn't stressful enough, this might put shops at risk of financial losses
Merchants need an in-depth understanding of the types and variations of chargebacks that occur after holidays in order to manage this sensitive situation efficiently. The holidays are typically a time of great chaos. Occasionally, supply runs out due to an increase in demand. Businesses often resort to hiring temporary workers in order to keep up with demand.
What Causes Post-holiday Chargebacks?
While many associate the holiday season with joy, businesses may face challenges due to chargebacks that occur after the holidays. Finding the many people or entities responsible for the arrival of unwanted guests is essential since they have the power to ruin any financial statement. Now that we know why chargebacks happen after the holidays, let's look into it more.
1. Fraudulent Activities
Unfortunately, hackers flock to exploit the holiday season's noticeable increase in online purchases, taking advantage of both the enthusiasm and lax security measures. Thieves can exploit compromised accounts, stolen credit card details, or spear phishing attacks to make illegal purchases. Chargebacks could happen to merchants because of this.
The holiday season is a prime time for stolen or fraudulent gift cards. Activating the cards or deceiving individuals into purchasing them are two of the many tactics used by scammers. When customers use their cards to buy products or services, the business actually selling them has to cope with chargebacks sent by the bank that issued the cards.
There will likely be some delays in processing and fulfillment of orders due to the high volume of activity during the holiday. If a customer experiences mistreatment or receives items that are damaged, missing, or incorrect, they have the option to submit a chargeback to try and recover their losses.
During busy shopping seasons, stores may run out of stock and end up selling things they actually don't have. Customers' displeasure, which could lead to chargebacks, is a common consequence of being notified of cancellations or backorders.
2. Delivery Delays
The delivery systems that deal with holiday deliveries may get overwhelmed by the rise in package volume that occurs at this time of year. The end result is irritated consumers, late deliveries, and lost shipments. If a customer's purchase doesn't come on time or doesn't arrive at all, they may even request a chargeback.
The holiday season is a commercially “dangerous” time to make unrealistic promises about swiftness of delivery. Feelings of disappointment and even chargebacks can ensue when shipments are delivered far later than anticipated, particularly when they are gifts that require prompt arrival.
Unpredictable weather is a typical occurrence during the holiday season, and it can disrupt and postpone deliveries on occasion. Stores may not be able to stop bad weather from happening, but they can take precautions to avoid chargebacks caused by it. As part of this process, it is important to learn how to communicate with clients and anticipate possible seasonal weather patterns.
3. Return Policy Disputes
There are a lot of people who, in the midst of all the holiday shopping, make hasty purchases they'll regret. Frustrated customers may resort to chargebacks as a quick fix when they face a return policy that is hard to comprehend, has restrictions like short deadlines or restocking costs, or is otherwise not clear.
Unexpected handling fees, return shipping costs, or lengthy processing delays for returns can lead to unhappy customers and arguments. The best way to avoid chargebacks is to be upfront and communicate clearly about the return process.
Technicalities or staff errors can often lead to returns being disallowed, even when they comply with policy criteria. When this happens, customers could feel cheated and decide to submit a chargeback to get their money back.
4. Buyer's Remorse
People often spend more than they envisage during the holidays because they get into the spirit of giving. This kind of emotional purchasing happens frequently throughout the holiday season when shoppers give in to impulsive purchases fueled by happiness and anticipation. People may opt to file chargebacks to erase undesirable transactions when the initial enthusiasm wears off and they start to feel regret about their purchases.
Sometimes it may be difficult to know what to get someone as a present as they could not like it. The giver of a gift may face chargebacks after the holidays if the receiver does not use or want the item. When the customer pays for the item with their own credit card, this happens.
How Can You Safeguard Your Business During the Holidays?
The holiday season comes with both attendant opportunity and difficulty for merchants. Even though the holiday season drives up revenue, you should think about the dangers of fraud and chargebacks. Intelligent chargeback prevention helps you to prepare strategically and be proactive in order to lessen the impact of these risks.
Businesses need to maximize income potential while protecting against chargebacks and fraud. It is also crucial to plan for an increase in assaults and execute cost-effective solutions in order to confidently navigate this critical moment.
1. Fortify Your Defenses
Intelligent chargeback prevention is pertinent in order to protect yourself against chargebacks, you should take precautions. If you want your transactions to be safe, you should use reputable payment gateways, use fraud prevention software, and look into any orders that seem fishy. The best defense against fraudulent transactions is vigilance, so keep that in mind at all times.
When training your elf crew, pay close attention to detail. Stringent verification measures should be put in place to guarantee accurate order processing. Furthermore, ensure to keep your inventory levels current and inform your clients right away if there is a possibility of supply shortages.
2. Polish Your Policies
For the benefit of your customers, ensure your website has a clearly stated and conveniently located return policy. This information should also be included in purchase confirmations to prevent payment disputes. Timelines, conditions, and any possible fees should be communicated in an open and honest manner. Having a crystal ball is like having a magic bullet that keeps return conflicts at bay.
Be patient and friendly, and make sure your customer service representatives embody the spirit of the season. Rest assured, your complaints will be promptly and politely addressed. If you have any problems, we will explain them clearly and give you fair answers. Avoiding buyer's regret is easier if you keep a pleasant manner.
3. Proactive Communication
Before a consumer makes a purchase, it is crucial to give them clear and simple information about the shipment date, possible delays, and return policies. When dealing with unreasonable expectations, being open and honest can help.
Implementing automated Cashback handling, post-purchase order tracking tools e.g Cashback softwares and proactive communications can greatly improve the customer experience. Customers will be kept fully informed about the status of their transactions using these platforms. You may rely on communication like a reindeer sleigh, guiding you across the perilous landscape of worried questions. Chargeback management tools can save you this stress.
How Can You Recover from Post-holiday Chargebacks?
Even though it would be great if chargebacks didn't happen after the holidays, if you want to keep their financial impact to a minimum, you need to concentrate on recovering from them. Here are a few recommendations for chargeback protection for merchants:
1. Understand the Reason
Examining the customer's statement in addition to the reason code will help you determine the exact reason for the chargeback. The purpose of this investigation is to identify the root cause of the chargeback, which could be an unlawful transaction, an order discrepancy, or something else entirely. Finding the best recovery plan is much easier with this.
2. Gather Evidence
Chargeback insights and analytics; Collecting all the required paperwork, including confirmations of orders, proof of shipment, receipts for returns, images of products, and records of correspondence with chargeback software can serve as evidence to back up your claim while disputing the chargeback.
3. Respond Promptly
Stop procrastinating! When it comes to handling chargebacks, credit card issuers usually have tight deadlines. Using a chargeback resolution software, send in your counter argument with all the proof you need. This speeds up the dispute resolution.
4. Contest Logically
Using an effective e-commerce dispute resolution system, avoid using emotional language and focus on factual arguments. For what reason is the chargeback deemed invalid? Elaborate on that. You should back up your explanation with any pertinent agreements, policies, and facts.
5. Improve Your Customer Service
A good listener is a powerful asset that should never be undervalued. Instruct your customer support representatives to avoid finger-pointing and instead listen attentively to clients' problems. You can better address the chargeback with accuracy and efficiency if you take the time to fully grasp its rationale.
Responding quickly to refund requests is crucial when customers express valid concerns. Take care of them quickly and, if possible, try to fix them the same day. You will demonstrate your commitment to equity and alleviate the customer's financial hardship with prompt responses.
6. Consider Professional Help
Consulting a chargeback recovery expert, using Fraud prevention softwares, chargeback protection companies and software might be helpful if you're handling complicated or high-value chargebacks. You can significantly improve your chances of success by enlisting their skills and experience and achieve a chargeback rapid dispute resolution.
Conclusion
The thought of having to deal with chargebacks after the holidays can be daunting, especially as the festive mood begins to fade. Nevertheless, as business owners, remember that you are not powerless in the face of these intruders.
You need to be proactive if you want your company to have a safe and prosperous holiday season of sales. To achieve this goal, it is necessary to establish and enforce stringent security measures by making use of chargeback management tools, have open and honest practices, integrate chargeback solutions and keep lines of communication open. Doing so will help you build your business and face the hectic holiday shopping season with confidence.
Learn how MidMetrics can help reduce the strain of post-holiday chargebacks with actionable insights, intelligent dispute management, and automated chargeback mitigation. Schedule a meeting with us today to learn more.
Chargeback Prevention, Chargeback Fraud, Friendly Fraud, Ecommerce Fraud
