With the increase in ecommerce, it is not surprising that online fraud is growing, too. By some reports, as much as 7.5 percent of all online transactions are fraudulent in 1 manner or another — whether it’s chargebacks, non-deliveries, or yields. Each of them cut into merchants’ profits, particularly in January and February, when they hit the hardest.
Merchants should aim for fraud and build it into cost calculations and in the necessary margins to pay. Merchants should also strive to prevent it.
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Chargebacks are especially annoying. Not only do you stand to eliminate the item and the money, but you also pay the payment processing.
Banks have clear rules for contesting chargebacks. Follow them. There’s no second chance. Give banks everything — the initial arrangement, all communication you had with the buyer, postage information, delivery information, and anything else that matters.
You might get lucky and win.
Banks have clear rules for contesting chargebacks. Follow them.
Nonetheless, after every chargeback look at the facts and think about what you might have done better. By way of instance, did you charge a different amount to what has been displayed on the website? Did the consumer miss the sales tax or postage add on? Does your name appear differently on the credit card invoice (this is a frequent flaw)?
Add explanatory text to your own checkout to deal with potential confusion and thereby decrease the amount of chargebacks. A couple well-chosen words could make a difference.
In my experience, it is often tricky to differentiate between real non-deliveries and deceptive ones. That is especially during the holidays when there are a lot of shipments.
Regardless of what you suspect, there’s not much you can do other than refund the client. Otherwise you could be given a chargeback or a claim on Amazon or PayPal which you can’t defend.
Regardless, whenever clients claim non-delivery, I ask them to check with neighbors or other neighboring residents. I also ask them to send a formal, written message confirming they have checked and that it hasn’t arrived. I then explain that I want this formal notice so the courier may investigate in the event of theft by the motorist. This sometimes works, and parcels are “found.”
After several non-deliveries, it’s well worth looking at your own courier. Some are better than others. Sometimes the least expensive company can cost more than a costly one. To reduce costs, the cheapest carriers may sometimes impose unrealistic demands on their drivers, causing them to not bother delivering or simply leaving things on doorsteps without checking to determine if the client is in. Such practices create non-deliveries, and the merchant pays.
After a variety of non-deliveries, it’s well worth looking at your own courier. Some are better than others.
Actual yields, where the client has returned undamaged the identical merchandise you shipped, can be redeemed as yields. Your loss is postage and some margin.
The actual problems occur when the client has used and abused the item, has sent back another one, or has sent back an empty box. Regrettably, most banks, in addition to PayPal and Amazon, assume the customer has in good faith returned the item. I haven’t heard of a merchant successfully protecting against issuing a refund.
Analyze why returns are happening. Can you address the cause? Occasionally a more exact product description, with measurements and additional images, can improve customers’ understanding of what they’re getting and thus reduce yields.
Informing customers that you maintain a register of all serial numbers in case of product recalls can dissuade fraudsters who intend to send back a broken product not ordered from you. I also keep a database of consumers who have sent merchandise back. I decrease subsequent orders from repeat offenders.
The Important Thing
There’s absolutely no ironclad means of eliminating fraudulent returns, non-deliveries, and chargebacks. They’re a cost of doing business. But careful management can lower the number.
The main thing is always to give customers their money back. This may encourage honest clients to purchase again. Fraudsters, however, know the system and will often prevail. Do not take it personally. It’s business.