The holiday season is the perfect time of year for merchants to increase sales and boost profits. Unfortunately, as revenues are rising, the likelihood of a spike in chargebacks is also greater. There are many reasons credit card disputes may occur. At times, buyer’s remorse can lead to friendly fraud. This is particularly true during the holiday rush. A purchase that starts out as a positive experience for the consumer sometimes goes sour – especially when the buyer is making an impulse purchase or caught up in the gift-buying frenzy. Post-purchase distress and second thoughts can lead to a consumer disputing a legitimate merchant’s charge, putting an unfair financial burden on the merchant.
Too often cardholders do not contact the merchant until after a dispute is filed, if at all. To avoid being put in the position of experiencing unnecessary chargebacks, merchants should encourage consumers to return unwanted items, rather than dispute them. An excellent return policy is your best defense against post-holiday chargeback spikes.
To create a successful return policy, include the following key distinctions that work in everyone’s favor:
- Make it clearly visible. Don’t bury the details on your website in deep pages or use a small font in the footer. Use bold text and design and display it prominently on all pages of importance, including the home page and product pages. To let your customers see all of the details of your return policy you can include a link to a page that spells it all out and answers the customers’ questions.
- Use simple language. Even though your return policy is a binding agreement, it doesn’t mean you should include confusing legal terminology. Customers want information that is easy to understand, presented in a way it can be read and absorbed quickly.
- Simplify the process. Your goal is to make the return process easier (or just as easy) as the chargeback process would be. Including a return shipping label is an excellent time saver, or alternatively, give your customers a way to print their own. If the consumer finds the process to be too expensive, time consuming or complicated, they will be more tempted to keep the item and dispute the sale.
- Have options and state them clearly. Store credit and partial refunds on unopened items where an unconditional refund is not possible will give customers fair options that allow them to return items that have been opened or used.
- Be generous. Show your customers your sincere intention to be honest and fair and they will be more likely to do the same with you. Loyalty is built on meeting your customers’ needs and solving their problems.
The chargeback process is complex and time consuming for merchants and chargeback fees are charged to the merchant whether or not it is successfully disputed. Additionally penalties can be incurred if a business has excessive chargebacks. The costs to the merchant don’t always end there when merchandise is not returned. For these reasons, to avoid chargebacks after the holidays and any time of year — work on creating return policies that will help decrease your risk of chargebacks and improve customer satisfaction.