While Amazon Prime Day in July broke global sales records, with 34.4 million items ordered worldwide, the ecommerce behemoth saw lots of criticism in social media from consumers who complained about featured specials and the limited availability of some popular items.
Monica Eaton-Cardone, co-founder and chief operating officer of dispute mitigation and risk management firm Chargebacks911, warns that a promotional event like Amazon Prime Day may have additional consequences like increased returns and a greater potential for fraudulent chargebacks. The firm advises other ecommerce merchants to be aware of these risks when planning a limited-time promotion.
“How many customers placed orders on Prime Day without thinking twice for fear of missing out on a good deal, then later realized they overspent or purchased things they didn’t really want or need?” Eaton-Cardone asked. “Amazon and its sellers will likely face a record number of returns and they may also experience an increase in chargeback fraud from regretful buyers.”
“Friendly fraud” or charge fraud occurs when consumers initiate unwarranted chargebacks for items they purchased in an attempt to avoid paying for them.
Here are six tips to help you prevent credit card chargebacks and friendly fraud:
Ensure Price Transparency: Is the total order cost clearly communicated before checkout? Hidden fees and add-on charges can negatively impact consumer satisfaction and perceived value.
Minimize Delivery Time: Ship orders as quickly as possible and make sure customers know when to expect their merchandise. Delivery delays can result in chargebacks if consumers feel the wait is too long.
Make Returns Easy: Maintain fair return policies and prominently display return instructions to increase the likelihood of consumers returning merchandise rather than filing a chargeback.
Document Everything: Keep a paper trail for every transaction, from identity verification before checkout to delivery confirmation; this will provide important supporting evidence in chargeback disputes.
Customize Every Dispute: To increase chargeback dispute win rates, chargeback specialists use a multi-step process to customize each response before submitting it to the bank.
Implement Dynamic Loss Prevention: Static techniques can’t keep pace with the evolving ecommerce landscape, which is why effective chargeback mitigation relies on adaptive solutions.
“While consumers are responsible for perpetrating chargeback fraud, ecommerce merchants can and must take proactive measures to protect themselves,” Eaton-Cardone said.