Combatting Click and Collect Chargebacks in an Omnichannel World
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.
So how do you counteract click and collect chargebacks? Deal with the increased fraud risk while understanding how to successfully balance frictionless 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 attack 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.
Lose the defence, be proactive
We hear you, identifying chargebacks at their source and disputing them can be tough and demanding for retailers and their in-house fraud teams. So those struggling with chargebacks that stem from click and collect operations – or for those thinking of implementing new omnichannel sales strategies – should focus seek advice from third-party solution providers.
Not only does the dispute win rate of retailers using third-party solutions jump by 20% compared with those that dispute in-house, but third-party experts gives access to specialised expertise and insight beyond a retailer’s own experience.
Combining knowledge of wider industry patterns with internal teams’ more intimate understanding of their operations can be the difference between defeating click and collect chargebacks or succumbing to them.
MONICA EATON-CARDONE
+44 (0) 203 750 5550
www.chargebacks911.com
monica@chargebacks911.com
To find out more about Chargebacks911 and the services they provide to the retail industry, click here.
This article was originally published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.