It is no secret that the COVID-19 pandemic caused a sharp increase in fraudulent activity and chargebacks. It is also well-known that e-commerce merchants saw massive increases in their online transactions during COVID as retailers used online channels as a replacement for in-person transactions. As such, many analysts predict a continued elevated number of chargebacks in 2021.

With much of the workforce still operating remotely and teams being separated, the manual process of chargeback management can prove problematic. It is imperative for merchants to find ways to effectively manage their increased chargebacks to minimize their vulnerability and the potential damages.

The experts at Accertify recommend five key action items to slow disputes and implement effective chargeback management:

1. Relax Cancellation and Refund Policies

Several dispute trends have arisen during the pandemic. Some of these are related to the pervasive supply chain disruptions and include services-not-rendered disputes. Merchants may provide more flexibility for consumers given that their goods or services may encounter delays or changes. When customers feel more confident that they can cancel or get a refund, they may be less inclined to do so simply because they see it as their only option.

If you still opt to enforce strict cancellation and refund policies, then it is important to clearly communicate those terms and ensure the cardholder accepts within the purchase path. This may ensure any disputes which arise can be responded to by utilizing the agreed upon terms and conditions, potentially increasing your likelihood of success through the credit card dispute process.

2. Offer an Incentive Not to Cancel

While buyers may appreciate the reality of new norms, understanding does not always yield patience. It may be useful to provide a compelling incentive for buyers not to cancel their orders, even when disruptions occur. These can come in the form of an immediate or future discount, or some other perk that motivates buyers to wait out a delay.

3. Bolster Customer Service Teams

In a climate where buyer remorse is increasingly common because of unforeseen circumstances, customer service personnel are on the frontlines.
Sizable investments are being made in everything from chatbots to email responses to increased headcount. Because of their vital role, customer service teams should be well-equipped and regularly encouraged. As they bear the brunt of complaints or the threat of returns, they should know exactly what to say and be provided with a robust set of tools that they can use to support their customer interactions.

4. Work Closely with Financial Partners

Financial institutions are important partners to mitigate the risk of fraud and chargebacks. Merchants understand their financial standing is impacted when the percentage of chargebacks gets too high. Chargeback management and prevention must be an ongoing process. Financial partners and merchants are on the same team. Everyone has an invested interest in reducing the frequency of chargebacks and may find better solutions by working together.

5. Clearly Communicate Policy Changes and Anticipated Impacts to Product Availability and Shipping

All consumer-facing messaging should align. Merchants may have no choice but to make policy changes to quell order delivery disruptions and the sheer volume of chargebacks. If this occurs, communication should be channeled appropriately and with precision to ensure those policies are presented in a winning way for both the merchant and the consumer. If done well, stated policies can be embraced, rather than resisted, by a merchant’s consumer base.

Likewise, merchants have the power to set consumer expectations about when they will receive their items. If people know what to expect, they will feel less inconvenienced. The fact that there is a global pandemic is news to no one. When shoppers are reminded that external factors impact their experience, they are less likely to retaliate to the merchant directly or be otherwise displaced. Because of this, over-communication should be the norm today.

Chargeback Management and Dispute Resolution

The overarching approach merchants must take to mitigate chargeback risk is a proactive one. Getting ahead of high chargeback incidents is the first goal.

Chargebacks do not have to be a runaway train and there are reasonable solutions to address these issues once they occur. Less damage will be caused when chargebacks and disputes are effectively resolved. In a recent chargeback trends webinar, attendees stated these favored methods for managing disputes:

● Revised prioritization (26.7%)
● Automation (26.7%)
● Accepting low-dollar value disputes (23.3%)
● External help (13.3%)
● Additional headcount (10%)

Overwhelmingly, merchants feel that providing proof that services were available is their best recourse for resolving canceled or merchandise-not-received disputes.

Chargeback Protection

As businesses respond to disputes, increased efficiency is being achieved through both technology and people-based approaches.

Of course, dispute trends change. While COVID-19 has ushered in unprecedented circumstances, it is possible to take action to protect the bottom line. To online retailers of all sizes, reliable chargeback protection and mitigation is essential.