Fraud Caused By Drunk Shopping?

Sydney VaccaroChargebacks, Fraud Prevention1 Comment

We were recently asked through social media if a certain situation would be considered a valid reason to dispute a purchase with a link to an article. The article explained that Americans spend $30.4 billion on online shopping when they are drunk. So the question posed to us was the following: “is making a purchase while under the influence of alcohol a valid reason to dispute a purchase?”

Is Drunk Purchasing a Thing?

The Consumer Affairs article that was linked to the social media question was based on a survey of 2,000 Americans. They were asked about their drinking and online shopping habits. When you dig a little deeper into a few more sources, it turns out 46% of American adults who drink alcohol regularly admitted to making a purchase while under the influence. Americans truly spend an estimated $30.43 billion on these drunk purchases, which translates into about $447.57 per person. And drunk shopping is happening more often when compared to the 2017 average, when each person only spent $206 spent on drunk purchases.

What Does This Mean For You as a Merchant?

It may not sound like a bad thing to you if the worst case scenario is having a surprise package show up at the customer’s house. But when customers start to sober up and not recognize the package or purchase, that puts your company at risk for disputes—and that’s a bad thing.

What Types of Chargebacks?

So what type of chargebacks can come from a customer that made the purchase while drunk? It really comes down to how drunk they really were.

Chargeback Fraud

If a customer that made the drunken purchase remembers making it (and regrets it the next day), you may be looking at a case of chargeback fraud. Chargeback fraud is the fraudulent request for a return or refund in the form of a chargeback. The transaction is disputed by the cardholder in an attempt to regain the transaction dollar amount while retaining the product or services rendered. Chargeback fraud accounts for 35% of all fraud losses. Essentially chargeback fraud is when a person tries to take advantage of the chargeback process to get their money back from a purchase they actually made.

To prevent this type of chargeback fraud, make sure that your return policy is easy to find and is very transparent. Also, make sure that your customer service channels are easy to find and your customer service team is responsive. It is much easier to handle a return than handle a chargeback. So make sure the customer knows that they can reach out to you or return the product before deciding to dispute the charge.

Friendly Fraud

Now if the customer that made the purchase while under the influence of alcohol does not remember purchasing anything at all, you may be looking at a case of friendly fraud. While closely related to chargeback fraud, friendly fraud involves no malicious intent from the cardholder. Simple forgetfulness, family members making unknown purchases, or drunken online shopping can be the root of friendly fraud.

To prevent friendly fraud, tools like Real-time Resolution can be the most effective solution. But other non-real-time tools such as merchant descriptors and purchase confirmation emails are also essential.

In both cases, the best thing you can hope for is customers to remember they made the purchase. And if they don’t, they will look at the email confirmation and put timelines together in order to figure out what happened. But if you do end up with a dispute, the good news for merchants is that both chargeback fraud and friendly fraud disputes are winnable.

Is Drunk Purchasing a Valid Reason to Dispute a Charge?

No, it is not. The chargeback process is put in place to protect both customers and merchants from fraudsters. There is no reason to issue a dispute in these cases. The customer can simply reach out to the merchant for a return or to resolve the issue.

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