As we learned from the LexisNexis report, fraud rates are already on the rise. Now with the holiday season upon us, merchants are expecting to see a surge in transactions. Unfortunately, they can also expect a rise in fraud too.
Fraud attempts are expected to increase by 14% during the 2018 peak holiday season. Fraudsters are going to be targeting online channels as well as the buy online, pick up in store options. On Cyber Monday, click-and-collect services increased 65% year over year which is a record increase.
Most major retailers are trying to implement an omnichannel strategy. This includes making shopping and purchasing for the customer seamless across any channel they choose. Whether the person is browsing in the app or in-store, they should have the same feeling, branding, and messaging to make it as similar of a shopping experience as possible. Beyond that, the different channels need to be connected to make the shopping experience as easy as possible. Click-and-collect is a great example of this process. The customer starts the shopping journey online and ends it by picking up the product in-store.
Customers like click-and-collect because it helps them bypass shipping cost, they can get the item sooner than if it was shipped, they can browse the store from their home but still get the instant gratification of shopping in-stores, and all the conveniences it brings. Instant gratification, anyone?
Merchants benefit from the click-and-collect shoppers too. With a successful buy online, pickup offline strategy, merchants can bring internet shoppers into the store. This is an effective tool. Internet Retailing found that 60-75% of click-and-collect shoppers purchase additional products when they came into the store to pick it up. If the item they originally purchased does not fit or does not work for the customer, they can easily exchange or return it right then.
Unfortunately, the convenience that click-and-collect brings to customers is also a draw for fraudsters. It is mixing the best of both worlds for fraudsters. Ecommerce is the easiest place for fraudsters to get away with making a purchase. There is less fraud prevention because there is no way to use EMV chip technology or require the physical card. By choosing the click-and-collect method at checkout, merchants will not ask for the shipping address. This is one of the verification steps used to screening if the customer is legitimate or not. Which make the click-and-collect method even more enticing to fraudsters.
But not every dispute comes from these true fraudsters.
Majority of the time disputes are from chargeback or friendly fraud. Chargeback fraudsters are disputing because of buyer remorse or a more malicious reason like flip fraud. Friendly fraudsters are people who have simply forgotten the purchase and do not recognize the charge.
Each card network has specific reason codes that explain what compelling evidence is needed to win a dispute. To make the best case and have the best chance of winning a dispute, you need to make sure you are collecting the correct compelling evidence. This is done by setting up a specific process when customers pick up their click-and-collect purchases.
American Express transaction with Reason Code C08 for a click-and-collect transaction. Provide all of the following in your response:
- The cardholder signature on the pick-up form
- Any additional proof to demonstrate that the identity of the cardholder was verified at the time of pick-up
Need to respond to disputes categorized under this code? Download the response template for American Express Reason Code C08 here.
- Cardholder’s signature on the pickup form
- A copy of the cardholder’s identification
If you need to respond to a dispute categorized under Discover Reason Code UA02, you can download the response template right here.
MasterCard transaction with Reason Code 4837 for a click-and-collect transaction. You must provide:
- A receipt, work order, or other document signed by the cardholder stating that the goods or services were received by the cardholder
Trying to respond to a dispute categorized under this code? Download the response template for MasterCard Reason Code 4837 here.
When a customer comes to pick up a click-and-collect order:
- Have the cardholder sign a pick-up form
- Get a copy of the cardholder's ID
- Have employees check that the name on the ID matches the name on the order
By going through these steps, you will make sure you have the evidence necessary to win against friendly fraud and chargeback fraud disputes.