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Jackie Fusco, Operations Leader, Disputes Consulting
July 27, 2020
COVID-19 is changing commerce around the world. Among the impacts on businesses are delays in delivery and customer service, supply chain disruptions and labor shortages. Few sectors of the global economy are immune from the global economic shocks.
Chargebacks and disputes are an area where the economic realities of COVID-19 are manifesting. As stay-at-home orders and social distancing requirements shuttered businesses; cancellations, postponements and delays are everywhere. That’s led to a spike in chargebacks and disputes.
Chargebacks impose costs far beyond the value of the transaction that is refunded to the consumer which includes cost of researching the transaction, loss of product or service, and the operational expense to respond and manage disputes. The 2019 LexisNexis “True Cost of Fraud” report found that merchants pay $3.13 per lost dollar on avg, 6.5% increase from 2018.
Customer disputes and chargebacks can be a costly, time consuming and operationally burdensome process even during optimal conditions. The scale of chargebacks related to COIVD-19 adds to the general pressures merchants are dealing with on a day to day basis.
We’ve noted four major trends with chargebacks and disputes amid COVID-19:
There are several best practices to follow that will help reduce losses related to disputes. These were true before COVID-19, and today it’s more important than ever to effectively manage the dispute process.
Be open in your communications strategies. Use all available communications channels to communicate to your customers the ways your company is responding to the pandemic, especially around changes in operations.
Support contactless processing and avoid key-entering transactions. As brick-and-mortar business begin to reopen, remember that EMV is the preferred method for card acceptance. Accepting mobile wallets like Apple Pay and Google Pay allow less customer contact with your point of sale terminals.
Take time to understand local and state enacted government restrictions and laws pertaining to COVID-19. If you face disputes due to your operations being restricted, be sure to reference these laws in dispute documentation. If you’re able to offer alternative arrangements, be sure to reference these regulations in those communications.
Update refund and return policies and communicate any such changes to your customers. Consumers want resolution quickly. Communicating any temporary policies is especially important. Online updates, banners on websites, and clear disclosures of policies can all help reduce chargebacks and disputes. Provide as much information as possible and be responsive when customers reach out.
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