The holiday season is a time of giving, gratitude, and, unfortunately, a spike in chargebacks. As consumer spending surges between Thanksgiving and New Year’s, so do the risks for merchants. Whether you run a retail store, subscription box service, or high risk business, understanding how to prevent holiday chargebacks can make the difference between a profitable season and a frustrating one.
Why Do Chargebacks Spike During the Holidays?
As mentioned above, more sales mean more potential for disputes. But that’s not the only reason. While exact figures vary, many payment experts agree that the holiday season brings a significant increase in chargebacks, driven by factors like shipping delays, gift confusion, buyer’s remorse, and unfortunately, fraud.
Below we dive deeper into some of those common culprits behind the seasonal surge:
- Shipping Delays: Holiday backlogs and weather related issues can cause late deliveries, prompting customers to dispute charges. In fact, businesswire found that 66% of U.S. consumers have experienced holiday shipping delays. Including tracking updates and clear shipping cutoff dates in your policy can help manage customer expectations and reduce chargeback risk.
- Gift Confusion: Customers may not recognize a charge made by a gift recipient or misunderstand a subscription renewal or receive duplicate gifts from multiple family members, prompting returns or disputes. These situations can lead to chargebacks when buyers opt to go through their bank instead of contacting the merchant directly.
- Fraud: The volume of online purchases makes it easier for fraudsters to slip through weak filters. According to the FBI’s Internet Crime Complaint Center (IC3), non-payment and non-delivery scams cost victims more than $309 million in 2023, while credit card fraud alone accounted for an additional $173 million in losses. Strengthening fraud filters during peak seasons is critical to prevent holiday chargebacks.
- Buyer’s Remorse: During high spending months, some shoppers experience regret after impulse purchases, especially once holiday bills arrive. In an effort to recover funds, they may dispute legitimate charges through their bank rather than requesting a refund from the merchant, leading to friendly fraud and avoidable chargebacks.
No matter the cause, chargebacks hurt your bottom line, and your reputation. That’s why now is the time to take proactive steps to prevent holiday chargebacks.
5 Smart Tips to Prevent Holiday Chargebacks
As the holiday rush ramps up, a proactive strategy can make all the difference. Here are five essential tips to help you safeguard your revenue, protect your business, and prevent holiday chargebacks before they happen.
1. Set Clear Return and Shipping Policies
Make your return policy easy to find, easy to understand, and holiday specific if needed. Communicate estimated shipping timelines and any cutoffs for guaranteed holiday delivery.
2. Use Fraud Detection Tools
Invest in real time fraud prevention tools like CVV checks, AVS (Address Verification System), 3D Secure, and machine learning based risk scoring. These tools are essential for high risk merchants and eCommerce brands.
3. Provide Order Tracking and Delivery Confirmation
Give customers peace of mind, and yourself proof of delivery, by using detailed tracking and signature confirmation. This can be critical if you have to fight a dispute.
4. Keep Communication Open
Send order confirmations, shipping updates, and even holiday greetings. Customers who feel informed are less likely to file a chargeback out of frustration.
5. Use Recognizable Billing Descriptors
Make sure your billing descriptor clearly identifies your business name. Many holiday chargebacks happen simply because the customer didn’t recognize the charge on their bank statement.
Keep the Holiday Cheer, Lose the Chargebacks
Thanksgiving is all about gratitude, and your business will be grateful when you take the right steps to reduce costly chargebacks. By implementing fraud protection tools, setting clear expectations, and maintaining strong customer service, you can prevent holiday chargebacks and keep your sales merry and bright.
At SanctusPay, we help businesses, especially those in high risk industries, prevent holiday chargebacks with advanced tools, fraud monitoring, and expert support. Don’t let disputes derail your most profitable season.
Contact SanctusPay today for secure, smart payment processing you can count on all year long.
