The holiday season is the busiest and most important time of year for merchants. The two most important shopping days during the holiday season are Black Friday and Cyber Monday. These two days involve a high volume of transactions, which brings the potential benefits of an enormous amount of revenue while also bringing similarly elevated risks of chargebacks. A successful holiday season is often a make or break proposition for merchants. A key aspect of achieving that success involves navigating Black Friday and Cyber Monday without incurring too many chargebacks.
The increased shopping activity around Black Friday and Cyber Monday brings increased risk of chargebacks. Some of this is simply mathematical; as transactions rise, so do chargebacks. Some of it is due to increased rates of fraud. And some of it is due to the extreme volume of activity causing merchants to make more errors and be less diligent in their fraud prevention efforts.
Black Friday and Cyber Monday are both prone to high incidences of true fraud, which is one of the main sources of chargebacks. 2020’s increase in Black Friday and Cyber Monday sales also brought a 21% increase in the Better Business Bureau’s fraud tracker reports. In 2019, a cybersecurity expert told CNBC that “up to 30% to 50% of the annual average of data breaches happen in November and December alone.” According to ZeroFox, 64% of organizations report an increase in cyber crime on Cyber Monday.
Fraudsters specifically target consumers and merchants during the holiday season, with Black Friday and Cyber Monday being the most active days. Some of this is simply due to the fact that fraudsters know the largest volume of transactions of the year occurs on these two days, leaving them the most opportunity to commit fraud. Merchants can also leave themselves more vulnerable to fraud as their level of busyness on these two days makes it more difficult to maintain. Consumers also leave themselves open to special vulnerabilities on Black Friday and Cyber Monday, as well. In general, many modern consumers are savvy about avoiding such forms of fraud as phishing scams disguised as “too good to be true” sales and promotions. But the fact that Black Friday and Cyber Monday genuinely do involve such deals, combined with the limited time and inventory pressures of holiday gift shopping, can make consumers more easily fall victim to scams disguised as deals.
Other forms of fraud, such as chargeback fraud and friendly fraud, can also be higher during periods of intensely heightened shopping activity such as Black Friday and Cyber Monday. Consumers are often more impulsive, less careful, and more prone to irrational shopping behaviors. This could lead to a number of possible sources of chargebacks. For example, a consumer could make a purchase that they later regret, leading them to file a chargeback. Or a parent could be so busy with shopping that they accidentally allow their child to make unauthorized purchases, leading to family fraud induced chargebacks. And just as true fraudsters use the chaos of the shopping holidays to commit fraud, unscrupulous consumers could do the same to commit chargeback fraud as a form of cyber shoplifting.
Finally, merchant error is a significant but often under discussed source of chargebacks. It is a particularly acute issue during short periods of excessive shopping such as Black Friday and Cyber Monday. In their haste to keep up with the increased volume of transactions, attend to the needs of their many customers, and fully maximize the revenue opportunities, some merchants may get sloppy and make the sorts of mistakes that lead to chargebacks.
The most important thing merchants can do to reduce their susceptibility to Black Friday and Cyber Monday chargebacks is to remain vigilant. Merchants should not allow the hectic nature of these shopping holidays to prevent them from maintaining their usual standards of fraud and chargeback prevention. Other strategies to prevent these sorts of chargebacks include the same sorts of techniques that should be employed throughout the holiday season, such as:
The goal for merchants is to reap the benefits of the holiday shopping season without allowing their business to become susceptible to the risks of Black Friday and Cyber Monday chargebacks. This requires discipline and attentiveness, but it can be a great boon to their business during the holiday season.