As you’ve grown your online business, you’ve developed your own processes for deciding which orders you approve and which you decline. A common method used by many merchants is a “blacklist,” where certain details or attributes are a known sign of fraud across all orders. While such practices seem perfectly rational, the risk of declining a valid customer due to such generalities has now become a major industry-wide concern.Online merchants are estimated to be losing $40 billion a year from incorrect declines. These are orders merchants deemed too risky and declined when, in fact, they were from legitimate customers.
Given the unpredictable risk of fraud and the rising cost of chargebacks, we’ve collected some best practices across merchants that you can use to limit your chargeback risk while accepting more orders.
Offer fast and free returns (and exchanges)
This is a category of chargebacks you can tackle head on. As an example, consider the blue vs. gold dress debate in 2015. Viewers debated the true color of a dress from a picture that went viral. Some saw the dress as black and blue while others saw it as white and gold. The lesson to be learned here is you can’t assume that what you see (or post on your website) is exactly what your customers are seeing. When consumers don’t want to pay for return shipping or don’t understand your return policy they can quickly resort to chargebacks in an effort to get their money back. Thus, providing a detailed and customer-friendly return policy can deter customers from resorting to chargebacks while boosting customer loyalty through good customer service.
Don’t refuse refunds or exchanges on lost, stolen or broken items
Lost, stolen or broken items create an unfortunate situation where neither you nor your customer are at fault, but you will still be held liable. Refusing to refund your customer when their package has been lost or stolen creates a poor customer experience and invites your customer to file a chargeback – along with a less-than-desirable review. Given the potential lifetime value of each customer and the additional customers you can gain from referrals, it is financially beneficial for merchants to reimburse customers in this scenario. Customers who trust you will take care of them when accidents occur are more likely to purchase from you again and are more willing to give you more time to fix a problem should it occur in the future.
Signature on delivery
Obtaining signature on delivery can be especially important if you ship high dollar goods or allow customers to bundle items for larger value orders. By setting the expectation up front with your customer that a signature will be needed, not only will you be able to compare customer signature with the cardholder name, but you’ll also be able to confirm the person who placed the order is the one who received it. And if an issue arises on that order you have the confidence of validation that the order was received by the supposed cardholder at the correct address.
Protect your orders against fraud with chargeback insurance
While you can reduce chargebacks from legitimate customers by working with them to solve their problems, there’s nothing you can do to resolve a fraudulent order other than prevent it from being placed in the first place. In the case that a fraudulent order slips through, Signifyd’s 100% guarantee protects merchants with professional fraud detection backed by the promise that Signifyd will make merchant’s financially whole for any approved orders that turn out to be fraudulent.
All powerful brands bear proof to the value of trusting your customers and delivering better customer service for better financial returns. Loyal customers protect and grow the brands they like. Now, more than ever, you have options available to you that are better than simply declining orders that don’t “look right.” Start accepting more orders and grow your short-term and long-term customer base with Signifyd, because nobody wants to be on your “blacklist.”