Black Friday and Cyber Monday: Navigating Chargebacks and Protecting Your Business
Black Friday and Cyber Monday have become pivotal dates in the UK’s retail calendar, marking an unofficial start to the Christmas shopping season.
Originating in the U.S., Black Friday has spread around the globe, enticing consumers with limited-time discounts and huge promotions for technical goods which can be found both in store and online. This year the shopping event will take place on 29th November, and although there is only one day in the name, the event typically spreads itself across four days, ending just as Cyber Monday begins on 2nd December. Cyber Monday also originates in the U.S. but is a little different in that it spotlights discounts and promotions mainly on fashion and beauty items, only lasts 24 hours, and is strictly geared toward online shoppers.
Together, these two events create a powerful shopping window, offering retailers a unique opportunity to boost sales, attract new customers and strengthen their market presence ahead of the festive period.
What are Chargebacks & Why Do They Matter?
Chargebacks are a process that allows consumers to challenge and reverse charges through their bank or credit card provider when disputes arise, such as fraudulent or incorrect transactions. Originally designed to protect consumers, chargebacks have become an essential part of the payments landscape. For merchants, chargebacks can mean more than just lost revenue; they also come with processing fees and potential impacts on business operations. A high chargeback rate can damage a merchant’s reputation with payment processors, leading to higher fees or even account suspension. Understanding the chargeback process helps merchants maintain trust with their customers and stay compliant with industry regulations.
Why Black Friday and Cyber Monday Are High-Risk Periods
Black Friday and Cyber Monday are peak shopping events, which bring with them a huge surge in online and in-store transactions. This overwhelming increase in sales, while profitable to the merchant, also comes with increased risks. The combination of higher transaction volumes, rushed purchasing decisions, and limited-time promotions, creates an environment ripe for errors, buyer’s remorse, and more importantly, fraudulent activities. These conditions make these shopping days particularly susceptible to chargebacks, as fraudsters take advantage, and as consumers are more likely to dispute charges for a range of different reasons, from accidental duplicate purchases to claims of the non-receipt of goods.
Merchants need to be prepared for the potential and highly likely increase in disputes and ensure that their transaction monitoring and customer support systems are well prepared.
The Lasting Effects of Chargebacks on Merchants
The impact of chargebacks on merchants goes beyond financial loss. High chargeback rates can lead to increased scrutiny from payment processors, who may respond by imposing higher processing fees or, in some cases, terminating a merchant’s account. This not only strains the merchants cash flow but also disrupts the business’s ability to accept future payments. Additionally, the time and resources spent managing the disputes can detract from focusing on business growth and customer service. Over time, persistent chargebacks can damage a merchant’s reputation, making it harder to attract new customers and build loyalty. Therefore, managing and reducing chargebacks is crucial to ensuring long-term business health and sustainability.
Proven Strategies to Prevent & Mitigate Chargebacks
In order to navigate these peak periods effectively, it is important to have several strategies in place. Here’s a list of the top 12 things merchants need to do to be prepared:
1. Meet product expectations
It is vital for products to meet customer expectations. Providing clear and comprehensive product descriptions allows customers to fully understand what they are purchasing, reducing the chances of confusion or unexpected issues. By accurately setting these expectations from the start, businesses can effectively lower the number of chargebacks related to ‘product not as described.’
2. Provide Clear Shipping & Delivery Information
Merchants should provide clear and thorough shipping and delivery information to prevent customers from believing their item is lost and initiating a chargeback. Informing customers about expected delivery times helps manage their expectations. Whenever possible, include tracking details so customers can monitor their parcel’s progress and know its precise location at all times.
3. Be transparent on return policies
Transparency in return policies is equally important for maintaining customer trust and satisfaction. It is essential to provide clear and comprehensive instructions outlining exactly how customers can return an item, including any conditions that must be met. Outlining the steps for returning a product, such as contacting customer service or using a return portal, can help streamline the process and reduce frustration. Ensuring that return policies are easy to locate and understand not only empowers customers but also reduces the likelihood of disputes or chargebacks related to returns.
4. Provide Clear Billing Descriptors
Having clear billing descriptors is vital to help customers easily identify charges on their debit or credit card statements. An effective billing descriptor should include the business name, a website URL, and a clear description of the purchased product or service. This way, customers can quickly recognise where the charge has come from, preventing confusion and reducing the risk of disputes or chargebacks due to unrecognised transactions.
5. Enhance customer support
Providing excellent customer support is essential during peak shopping periods when customer expectations are at their highest. Merchants should consider offering real-time communication channels such as live chat, enabling customers to receive immediate assistance. A range of communication options is important, including the option to email, chat or call in order to resolve any issues. Investing in these practices helps resolve issues quickly and deters customers from calling their bank to initiate a chargeback.
6. Fast response times
Timely response times that align with customer expectations are crucial for maintaining their satisfaction and preventing frustration that could lead to filing a chargeback. Prompt, effective communication reassures customers that their concerns are being addressed, which helps to build trust and diffuse any potential tension. Ensuring quick and efficient responses across all support channels shows a commitment to high-quality service and helps mitigate the risk of disputes.
7. Invest in extra staff training
During peak periods, when extra support and resources are often required, it’s essential to ensure that there is adequate staffing to manage the increased demand. This includes not only customer service representatives but also staff across other departments who may be involved in supporting the overall customer experience, such as technical support, order fulfillment, and inventory management.
8. Make all Processes simple to Navigate
Making returns processes and access to customer service seamless and pain-free is key to positive customer experiences. By simplifying returns, ensuring that they are straightforward and clearly communicated, customers will feel more confident and supported throughout the process. Easy access to responsive customer service, also reinforces that the merchant is willing to resolve any issues quickly and efficiently. When customers find it easier to work directly with the merchant than to go through their bank, they are far less likely to resort to filing a chargeback.
9. Keep customers informed
One of the most effective ways to prevent chargebacks is by keeping customers well informed throughout their entire purchase journey. From the moment an order is placed to the delivery of the product, providing clear and timely updates helps to reduce any confusion or frustration. Regular communication ensures customers are always in the loop about their purchase, preventing chargebacks being filed as a result of frustration.
10. Fraud detection tools
A robust, multilayered fraud prevention strategy is essential for protecting both the merchant and the customer. By implementing a combination of tools and techniques such as transaction monitoring, identity verification and machine learning algorithms, businesses can detect and block fraudulent activity before it impacts customers. These preventive measures help reduce the occurrence of chargebacks by addressing fraud at its source, preventing unauthorized transactions from being processed. It also gives customers peace of mind that their accounts and personal information are secure in the hands of the merchant.
11. Actively combat friendly fraud
If a merchant is faced with a chargeback which is not due to fraud or an error, it’s likely to be friendly fraud, where a customer wrongly disputes a valid charge. Merchants should challenge these chargebacks to get their money back. If they don’t, fraudsters may keep targeting the same business. By fighting these chargebacks, merchants show payment processors and banks that they’re serious about preventing fraud, which can help in future cases.
12. Implement chargeback management
The best way to handle fraud and chargebacks is to be proactive by creating a comprehensive prevention plan with the help of a chargeback specialist. This can include using fraud detection tools, monitoring transactions, and improving customer authentication. A chargeback specialist helps customise the strategy, identify potential fraud risks, and set up processes to handle disputes. By working together, businesses can reduce chargebacks during the Black Friday and Cyber Monday shopping frenzy and ultimately, safeguard protect their hard-earned revenue and reputation.