Christmas songs sing from the speakers overhead in your brick-and-mortar store, or perhaps your laptop as you work on your online merchant website. Sales have been up, up, up, holiday shoppers flocking to your business. 2025 fast approaches and it’ll bring further success. Only, the mood gets dampened when you open your email and receive notice that you’ve been hit with a chargeback. But hey, it’s only one chargeback, right? 2025 will bring fewer, surely?
Actually, come January, you’ll likely get hit with a serious uptick in chargebacks. That’s because late December, January, and even early February are sometimes referred to as chargeback season. Before chargeback season arrives, businesses big and small should take steps to reduce and prevent chargebacks and disputes. Let’s take a quick look at some things merchants can do to ward off chargebacks this holiday season (and after). The right moves could lead to a substantially better chargeback season.
Set Up a Customer Friendly Return Process
Returns are no fun, and ultimately, more than 15% of holiday purchases were returned in 2023, totalling nearly $150 billion worth of goods. Returns can put a damper on the holiday and post-holiday spirit.
Some merchants respond by not offering returns at all or setting a really short return window. Some charge restocking fees or make customers pay for shipping. Yet here’s the problem: if your return process is too hard or expensive to use, customers may simply turn to their card issuer to ask for a chargeback. For customers, chargebacks are easy to file, free, act like unauthorized returns, and customers can even keep the products.
A customer-friendly return process can ward off chargebacks. Let’s take a closer look at what such a return process looks like.
Offer a Long Return Window
If you offer only, say 14 days to return a product, and someone buys a gift in early December and then tries to return it in early January, the cardholder may file a chargeback if you don’t accept the return. A 14-day return window may be fine most of the year, but with the holidays, you want to keep the delay between purchasing and evaluating the product in mind. Rather than giving customers only 14 days, you may want to give them until the end of January or January 15th to make a return.
Don’t Make Returns a Hassle
If a customer messages your customer service department to file a return, but you don’t get back to them for three days, they may get antsy and could turn to their card issuer to file a chargeback instead. Likewise, anything else that makes the return process cumbersome, or expensive for that matter (like restocking fees), could encourage them to skip the hassles and go to their bank.
Watch for Fraud
Chargeback fraud is a major issue all year round but come the holidays, it’s often turbocharged. Here’s the thing: fraudsters know merchants are busy processing orders. This makes it more likely that the merchant will miss red flags. Meanwhile, once a cardholder realizes that they’ve been defrauded, they’ll likely file a chargeback.
Some signs of fraud to watch for:
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Overnight shipping- Fraudsters like quick shipping because it makes it more likely they’ll get their hands on a shipment before you or the cardholder can shut it down.
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Strange addresses- If the cardholder lives in Oregon but they’re shipping goods to Chicago, it could be because a fraudster is using another address where they can take control of the shipment. You may want to pause the order until you can confirm with the customer.
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Login shenanigans- If the IP address the customer is logging in is from out of the country, or there were multiple failed login attempts, it could be because some fraudster has taken over an account.
Use the Right Chargeback Prevention and Management Tools
If there’s a silver lining for merchants regarding chargebacks, it’s that the serious threat and cost of chargebacks have led to the creation of a plethora of effective chargeback mitigation tools. Figuring out which chargeback prevention tools to use can be a bit intimidating, but some tools worth considering include:
Chargeback Alerts
With chargeback alerts, merchants are sent warnings about impending chargebacks, giving them a chance to resolve them before they become a black mark on their record. If a chargeback is obviously due to legitimate fraud, say stolen credit card data, best to provide a refund. If you lose a chargeback dispute (and you will in cases of legitimate fraud), not only will you lose the revenue from the sale, but you’ll be hit with chargeback fees, and your chargeback ratio will rise, potentially resulting in further penalties.
Address Verification Services
With AVS, shipping addresses can be checked versus addresses on file with the credit card. If something suspicious comes up, the order can be paused or canceled.
Two Factor Authentication
Two-factor Authentication (2FA) requires users to provide two forms of ID while logging in online. Hackers can often come across one form of ID, like a credit card number, relatively easily. If the hacker needs to plug in a code texted to a user’s phone, they’ll also have to get that code, which in practice is quite difficult. 3D Secure, among other tools, allows merchants to easily use two-factor identification in combination with credit cards.
Chargeback and Dispute Management Platforms
As mentioned above, chargeback alerts are great, but there are several services, and usually merchants should set up multiple alert systems. In practice, this makes alerts hard to manage. The best chargeback management platforms allow merchants to manage multiple services from one dashboard.
Likewise, it’s wise to fight many chargebacks, but the chargeback rebuttal process is rather complex and you have to hit various fast-approaching deadlines. Dispute management platforms make it easier to not only manage the so-called “representment” process but also to gather and submit evidence, among other things.
ChargebackHelp offers tons of features and tools that will help merchants combat and reduce chargebacks. Not only can we help merchants save money, but we can also help you reduce the amount of labor and time spent managing and fighting chargebacks. This can lead to a more pleasant chargeback and return season.