Across the ecommerce organization, from marketers to webmasters, the post-holiday period brings high-fives and sweet relief. Everyone gets to recover a bit after the insanity of the Q4 shopping season. 

Everyone except for fraud managers, that is.

In the fraud prevention world, insanity season is just beginning. There’s a deluge of returns and the potential of returns abuse that follows gift-giving season — and there’s a mind-boggling volume of chargebacks to review, dispute, and track. 

These factors combine to create the notorious “holiday hangover” familiar to fraud teams in the ecommerce sector. It takes a toll not only in terms of fraud losses, chargebacks, and dispute fees for your business but also the burden created by the torrent of work facing fraud teams.

Here you’ll learn about three strategies that quell the Q1 queasiness, supercharging fraud team efficiency and impact by:

  • Streamlining the dispute resolution process
  • Detecting and preventing returns abuse
  • Working with an accountable fraud prevention partner 

Streamline and automate representments to supercharge capacity

Managing the inflated chargeback dispute resolution workload after peak season remains the most tedious and time-consuming contributor to the fraud team’s post-holiday headache. 

In addition to chargebacks stemming from fraudulent holiday purchases made by third parties, there’s a sleigh full of first-party fraud chargebacks to deal with in Q1. 

Also known as “liar buyer” or “friendly fraud,” these are cases where the cardholder actually made the purchase but claims otherwise to defraud the merchant. Add to that dishonest item-not-received (INR) claims, and you’ve got a massive task ahead of you. After all, each claim requires individual investigation and representment by the fraud team, requiring tedious and painstaking workflows to evaluate and dispute. 

For example, the fraud team likely has multiple payment service gateways to monitor daily for incoming chargebacks. Working with different gateways forces the team to toggle between portals, stitch together data, and gather compelling evidence manually, case by case. It’s a struggle just to get to the bottom of the pile. And when they try to work faster, no chargeback gets their full attention, leading to losses that could have been avoided. 

An analyst may spend hours compiling evidence for a single chargeback dispute. And with so much of that time spent cutting and pasting data among spreadsheets and other manual tasks, skilled and experienced fraud analysts have less time available to spend on the tasks where they excel, such as digging up “golden evidence” to recoup chargebacks.   

The cure for this holiday hangover? Automation. By automating the more mundane aspects of the workflow, a chargeback management solution slashes the time it takes to process each dispute.

Instead of juggling isolated spreadsheets, the entire team shares a consolidated dashboard with clear delegation of tasks. Instead of cutting and pasting chargeback data and status changes, the system updates are automated in real time. Measurement and reporting are effortless because a single platform houses all chargeback data.

As a result, fraud teams can be more productive, catch more fraud, and spend their time on skilled detective and analytical work instead of data entry. 

Detect and prevent return policy abuse 

Post-holidays inevitably brings a rise in returns, which also means a surge in returns abuse. Abuse can be as blatant as returning an empty box or more sophisticated and hard to expose, such as falsely claiming an item was lost in transit or creating a fake tracking ID. Fortunately, many false refunds can be blocked ahead of time with the right technology.

Merchants can significantly reduce the volume of these and other types of returns fraud by proactively identifying risky patterns and behaviors before the crime occurs. 

Using identity-based clustering technology, merchants can recognize when an entity that has a history of abuse is trying it again — often using multiple accounts to commit abuse at scale. Using a large graph of data and by examining dozens of attributes ranging from keyboard language to product type, merchants can take proactive take action, from selectively creating friction for them during the purchase journey to blocking them at checkout altogether.

Then in the cases where purchases still result in claims, the same technology can be used to analyze when claims are likely to be coming from systematic abusers versus when the claimant appears to have a clean, non-abusive history. 

Take chargeback risk off the table with an accountable partner

Merchants can also reduce a lot of day-after pain by offloading the problem of fraudulent chargebacks to an accountable partner with a chargeback guarantee in place. 

With an accountable partnership model, merchants are assured of guaranteed approval rates to bolster the important Q4 sales season, and the partner’s chargeback guarantee eliminates the cost of the wave of third-party fraudulent chargebacks in Q1. This leaves the fraud team to manage only chargeback disputes for first-party abuse and thus recoup more of those losses.  

A bonus? Maintaining low chargeback rates with a chargeback guarantee also helps merchants steer clear of network chargeback programs run by card networks. Those programs create fines, fees, penalties, and the loss of processing privileges, which can extend the fraud team’s holiday headaches well into the spring.

Imagine Q1 without a holiday hangover

With fraud teams fully optimized instead of overwhelmed, the post-holiday season can look very different for the fraud organization:

  • A chargeback management solution streamlines the process of disputing chargebacks from first-party fraud.
  • Policy fraud prevention that is bolstered reduces the total pipeline of fraudulent returns and chargebacks.
  • A chargeback guarantee eliminates the worry of chargeback fraud costs caused by third-party fraud. 

With these three pieces in place, the fraud team now has the capacity to efficiently handle all the chargebacks that come through the door, successfully dispute more of them, and bring greater value to the business. 

Want the data? Get the new research 

A new study of more than 300 fraud prevention specialists reveals what the modern fraud manager faces when managing chargebacks today, including the average size of teams, the average time it takes to process chargebacks, use of third party vs. in-house, average chargeback costs, and much more. 

Sign up to be among the first to get this new research in Q1.