Cutting Chargebacks as eCommerce Surges

Whether consumers are making purchases on their phones through a retailer’s app or from a small business website on their personal computer, there’s no denying that ecommerce is taking off.

An increase in sales, however, often comes with an increase in chargebacks.

Cardholders may return products claiming the item they received doesn’t match the description online or the item was not delivered timely. One way to reduce chargebacks is to offer clarity whenever possible, whether product descriptions or estimated delivery timetables.

On top of this, there's always the possibility of outright fraud. The resulting chargeback activity can be costly to you as a merchant. So what can businesses do?

Give cardholders a positive online experience

Engaging with their customers in a way that leads to fewer chargebacks is a bit harder online than in person. Here are some things they can do to improve the odds:

• Provide positive, attentive customer service. When a customer knows they can get assistance from the merchant, they're less likely to take the complaint straight to their card-issuing bank.

• Keep customers informed on the status of their order, and then obtain signed proof of delivery when possible. Emails and other customer correspondence can also serve as evidence in their favor when customers engage in “friendly fraud.”

• Use clear payment descriptors to assure customers recognize a transaction on their credit card statement. Descriptors that don't sync with a business name may cause a customer to interpret it as a suspicious charge and report it to their card-issuer.

• Avoid technical errors and follow card network regulations to help ensure both the business and the customer have complete information about each eCommerce transaction.

Fight fraud

If your biggest increase in chargebacks is a result of fraud, there are some additional things to consider to help safeguard your business.

• Create your own set of rules to stop or flag potentially fraudulent activities, such as those that fall into certain patterns; e.g., multiple shipments to the same address using different credit cards.

• Obtain authorization approval, which can include using the Address Verification Service (AVS) to compare a customer’s address and zip code with information on file with their credit card issuer.

• Obtain the card verification code to get some assurance that the customer has physical possession of the payment card.

• Follow recommended procedures for managing fraudulent activities, which includes how to report suspected fraud, and when in doubt, call the card-issuing bank to verify cardholder information.