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The post-holiday season might turn into post-holiday chargebacks trauma.

Black Friday or Black “Fraud day”? Prevent Chargebacks Ahead the Holiday Peak

The most awaited online shopping events of the year are coming. In 2020, US retailers raked in $10.8 billion on Cyber Monday alone, kicking e-commerce sales indicators. While online retailers are gearing up for this year’s Black Friday, fraudsters are there for the perfect opportunity to defraud e-commerce businesses. A staggering 385% increase in payment fraud marked last year’s holiday season and analysts predict e-commerce fraud attacks to be even more ruthless this year. 

While headline-grabbing, record-breaking sales figures generate huge excitement, merchants should be aware of some common fraud challenges to look out for during Black Friday and Cyber Monday, such as identity theft, account takeover, or friendly fraud. These types of attacks are becoming more frequent, turning into fraudulent disputes after the exciting holiday season. Getting into the busiest days means more traffic and orders for merchants, more opportunities for fraudsters. Merchants loosen their velocity checks to reduce the number of manual reviews and false positives. This results in accepting more fraudulent transactions and traumatising chargebacks. 

The post-holiday season might turn into post-holiday chargebacks trauma. 

Chargeback loss is never immediate. While Black Friday week is peaking, no one thinks about that until “Black Friday Chargeback week” is arriving somewhere closer to January. 

It’s not only the cost of purchased goods and the refund the merchant needs to cover but also the fee from the acquiring bank, which covers the costs of processing the chargeback. These fees tend to range from $20 to $100 but with operation and customer acquisition costs, online sellers often lose 2 to 3 times the transaction amount. Even if the bank decides to cancel the dispute after recognizing a related refund, the online merchant still carries the dispute charges. So preventing them needs to be a high priority for all online merchants especially in the booming sales season.  

Post-payment risk scoring is a saviour against chargeback abuse. 

Securing online business during sales peaks, especially in terms of not killing the conversion, does not look like a piece of cake. For such cases, FUGU developed a new breed of payment fraud prevention solution analyzing consumer behaviour and interactions post-payment. It not only allows us to predict all possible fraud scenarios and secure merchants from threats but minimize false declines and payment churn safely validating legitimate transactions. 

Fugu post-payment risk analysis will alert merchants of potential disputes days and weeks after BFCM allowing them to proactively reach out to suspicious customers and prevent them from filing disputes 

By analyzing a list of signals, such as website visits, mobile interactions, contact form submissions, email openings, transaction changes, or automated customer verifications (KYC), FUGU tracks the entire interaction trail to make it available with one click as a piece of valuable evidence to challenge a fraudulent dispute. 

With all this data collected, FUGU performs a 60% recovery of disputes. 

The FUGU team wishes all eCommerce merchants a happy holiday season, loyal customers and sales increase. And we are always here to cover you from all possible risks and fraudulent disputes. 

Get in touch with our experts or download the FUGU App for multi-tier payment fraud protection.