How to Protect Your Business From Chargebacks on Black Friday & Cyber Monday


With Christmas fast approaching, retailers have the busiest days of the year to prepare for: Black Friday and Cyber Monday.

Black Friday, the day after American Thanksgiving, is Friday 24 November, with Cyber Monday on Monday 27 November. Many retailers make this an entire weekend, and some keep those sales and discounts in the lead up to and running for the rest of the week after to maximise revenue.

In 2016, US online retail figures exceeded $1 billion every single day during the Black Friday/Cyber Week period. In the UK, Barclaycard – responsible for processing nearly 50% of debit and credit card payments – noted that transactions were 6% higher compared to 2015. Black Friday and Cyber Monday spending in the UK was around £2.9 billion in 2016. Taking into account the week after the most popular retail days, total sales were over £4 billion.

This year, retailers are expected to exceed those figures, since these dates have become a fixture in the seasonal spending calendar. Online retailers, however, do need to be careful.

Shoppers aren’t the only ones out in force at this time of year. So too are fraudsters and cybercriminals, and those who commit ‘friendly fraud’ at the expense of online retailers.

Watch Out For Chargebacks This Christmas

Online fraud surged 31% in 2016. Card Not Present (CNP) transactions are always going to carry a much higher risk than in-store transactions, and this year we can expect the same increase in attempts to commit chargeback fraud.

Chargebacks, whether or not the person asking for one is a cybercriminal scamming hundreds of retailers, or a new or repeat customer who wants your goods but doesn’t want to pay, are a costly problem.

The result, for online retailers, is that 49% of revenue loss from online sales is a result of chargebacks, and according to LexisNexis, 60 – 80% of this is ‘friendly fraud.’ Without a doubt, friendly fraud increases at busy retail times of the year, and we can expect the same problematic trend will make an impact on, and take some of the shine off sales figures, on Black Friday and Cyber Monday.

Protect Your Business Against Chargebacks

Here are a few ways you can get your business and service partners ready for a spike in chargebacks, and ways to reduce the risk:

#1: Clearly define shipping and delivery timescales

At this time of year, post and shipping providers are running above capacity. Postage and shipping times can take longer, which is something the providers you work with, especially if shipping abroad, should tell you about.

Chargebacks can occur when consumers do not receive goods when expected. They may assume that delivery times will be comparable to other retailers, and not read the small print. Therefore make sure your customers are aware of this information. Make it prominent on your website or even provide a reminder at checkout.

To avoid fraudulent chargebacks because of ‘non-delivery’ get a signature to confirm delivery wherever possible, especially for high value transactions. Customers can easily dispute delivery if there is no way to verify that something has been delivered or not. Work with your shipping partners to ensure policies are maintained that confirm when goods are delivered, ideally with a paper trail that can be used in a chargeback dispute.

#2: Make returns policies clear and refunds straightforward

Returns policies should also be prominent so that if you do need to dispute a chargeback, you can prove that during busy periods customers were fully aware of your policies.

Refunds are far easier to process than chargebacks. They also don’t impact your relationship with card providers and acquirers. So make it easy for customers to request a refund instead of initiating a chargeback. Display information about refunds and returns prominently on websites, order confirmations, receipts and other communications.

#3: Adjust and strengthen automatic fraud guidelines

Payment service providers, merchant acquirers and payment gateways, should be ready for Black Friday and Cyber Monday. Your service providers should be ready to process a much larger volume of payments than normal.

At the same time, a larger than average percentage of these transactions could be fraudulent, which is something that fraud tools should be set up to handle. You need to balance speed and volume against a cautious approach necessary to catch transactions that aren’t legitimate, which means adjusting automatic fraud rules to check and prevent, if necessary, suspicious transactions without holding up sales.

Fraud prevention is also something that could be done manually using a batch model, which should cause minimal delay, providing you can review transactions during busy periods.

#4: Make transaction details clear

One reason customers will ask for a chargeback is they are unclear what a transaction is for when it appears on their card statement or online banking. This is something you need to make clear, especially important when sales volumes are high.

Make your transaction descriptors easy to identify, so that a customer knows what they bought, when and who from. Consumers may be buying from retailers for the first time during Black Friday / Cyber Monday period, and may not know that your brand is a subsidiary of another company. Keep your business/brand name on card statements the same as they appear online and in stores.

While chargebacks and online payment fraud are a side affect of a booming ecommerce and mcommerce landscape, with the cyber security policies, fraud prevention and systems in place, your business can reduce the risk this Black Friday and Cyber Monday.

For further advice on managing chargebacks over the Christmas period, or to discuss your specific requirements for online payment processing and fraud protection, contact our team: Call +44 (0)808 159 7217 or email [email protected]