The Retailer Winter edition_2020

finace and payments

Combatting click and collect chargebacks in an omnichannel world

MONICA EATON-CARDONE CIO AND CO-FOUNDER Chargebacks911

CLICK AND COLLECT HAS A DARK SIDE, HERE’S HOW RETAILERS CAN COUNTERACT IT Today’s customers crave convenience and flexibility, so retailers have turned “omnichannel” to match this demand. One multichannel approach to selling that has become favoured by retailers is click and collect – a way of introducing ecommerce elements into the bricks-and-mortar retail space. By allowing customers to shop online and pick products up in-store at a time convenient for them, retailers have been able to create a new level of flexibility and ease for the consumer. This method of purchase is rapidly increasing in popularity and is predicted to grow by 45.8% over the next five years, according to GlobalData. But click and collect has a dark side that will only get darker as demand for this sales programme becomes greater. And unfortunately, this can be seen throughout the retail industry. Whenever a retailer introduces a digital element into their payment process, they inevitably see an increase in chargebacks. As is the case with click and collect, increasing automation in the ordering process, alongside fewer face-to-face interactions with cardholders, can cause errors, misunderstandings and fraud. For scammers, this purchasing method can be a great way of ordering goods using a stolen credit card and picking up their new freebies in-store – knowing full well that identification is not always required on collection, and without the risk of using their own traceable address. Not all issues arise from the unruly, too. Some consumers may innocently disrupt the process, while the new gap in communication may be cause for more mix-ups on either side. Other consumers are also using click and collect as a chance to commit friendly fraud. They head online to order goods, shrouded by digital anonymity, and then complain to their bank that they ordered was wrong or they didn’t receive it – all in a bid to get their money back. Friction versus security From our experience in this industry, we can attribute anywhere between 60% and 80% of all chargebacks to friendly fraud. We’ve also seen chargeback rates on click and collect orders increase. With click and collect increasingly becoming a cause for concern, retailers need to take the proper steps to reduce the impact of omnichannel fraudsters, so they can still reap the benefits that this model has to offer. To counteract click and collect chargebacks, retailers should deal with the increased fraud risk in the back end while balancing smooth operations and security in the customer experience.

Remove fraud from revamped sales strategies There are many things that retailers can do, both pre- and post-transaction, to manage the risk associated with introducing new sales programmes. Although no solution is perfect, relying on a combination of tools like address verification, fraud scoring and CVV checks create redundancies that make fraud detection more accurate. Incorporating this multilayer approach also helps businesses successfully balance frictionless operations and security. This is because deploying multiple fraud screening tools in the back end won’t impact conversion at the checkout but will create a positive form of friction that will block genuine fraud. To dispute or not to dispute After discounting genuine criminal fraud, click and collect chargebacks will only come from two other sources: friendly fraud and error. Retailers dealing with chargebacks that stem from customers receiving the wrong product, something that wasn’t as described, or similar, should forego an automatic refund and work to mend the inefficient business practices – a third-party can help identity what went wrong here. But other cases, where the customer was simply trying to get something for free (friendly fraud), should always be disputed. Failure to dispute a chargeback that stems from friendly fraud only encourages this kind of behaviour and attacks on a retail business. After all, around 40% of consumers who commit friendly fraud and get away with it will do it again within 60 days. Accepting a chargeback also leaves the retailer refunding the purchase, paying processing fees and likely losing disputed goods altogether; all of which massively impacts their bottom line. Retailers can best dispute unfair chargebacks through tactical representment. That is, using all the data available to you – not just from that specific customer, but all trends from your payment data – to make an informed and strategic case that will defend your sale. Tip: One way to prevent friendly fraud before it gets out of hand is to address the customer experience. Create a customer experience that exceeds expectations by making all customer service information easily accessible and providing round-the- clock live support across multiple channels. Satisfied customers are far less likely to file chargebacks, so keeping on top of the customer experience is a must for all retailers.

40% of consumers who commit friendly fraud will do so again in the next 60 days

52 | winter 2020 | the retailer

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