Editor’s note: This post has been contributed by Pallavi Kuppa-Apte, Chief Operating Officer, Chargehound

We’re quickly approaching the most hectic time of an already hectic year—holiday spending season. U.S. consumers are poised to spend $198.73 billion with online retailers this holiday season—a 43% year-over-year increase, according to DC360. On top of that, retailers everywhere are playing catch-up to evolve their businesses for the e-commerce boom that we’ve experienced since the pandemic began in March. 

While the uptick in spending is good news for retailers, it also means you’ll need to be extra vigilant about fraud and chargebacks. Each year, chargebacks cost businesses as much as $15 billion annually. Still, there is reason for hope: after crunching the numbers, we’ve found that holiday chargebacks are more likely to be the result of friendly fraud than chargebacks received at other times throughout the year. Since friendly fraud disputes are recoverable, it’s more important than ever that merchants take measures to both prevent and fight their holiday chargebacks. 

Bracing for the 2020 Holiday Season

Historically, we’ve seen a 30-40% increase in chargebacks during the first few months of the year following the holiday rush. This can be due to a variety of reasons but the most common tend to come down to shipping issues or missing the return window. 

In order to offset these potential chargebacks, we recommend merchants offer even more flexible return and refund policies than in the past and ensure these policies are communicated frequently, both to customers and customer service representatives. With many retailers hiring seasonal workers during the holiday season, ensuring the customer care team is up to speed on messaging and policies can make a big difference in whether support requests turn into chargebacks.

When it comes to preventing chargebacks due to shipping delays, some merchants are taking the proactive approach of upgrading their shipping and logistics platforms to ensure orders arrive at the right destination on time. This gives customers less reason to dispute an order based on delivery issues. It can also help to warn your customers of shipping delays ahead of time, reducing the chance they are surprised by a delay and submit a chargeback after the fact. 

Kicking off 2021 Ahead of the Curve

Despite these proactive measures, disputes will inevitably still roll in. We’ve found that businesses that are able to address 100% of their holiday chargebacks experience 50-60% increase in revenue recovery in the first few months of the new year. Due to the scale of holiday spending, this can amount to hundreds of thousands, or even millions, of dollars. To maximize this revenue recovery, it’s important to get a scalable chargeback solution in place before the holidays hit.

When putting together representments, it’s important to understand what evidence is needed to win your dispute. After automating millions of disputes on behalf of merchants, we know that tailoring your evidence to the type of charge and optimizing your representment for readability can help increase your win rate. Given the sheer quantity of holiday disputes, there’s a big opportunity to recoup losses and improve your bottom line. 

2020 has been full of new challenges for retail, but merchants have become savvier and are better prepared to navigate an unprecedented online shopping season. Make sure to hold on to every dollar of revenue earned by effectively fighting friendly fraud.

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