Retailers and consumers are in for a holiday season like no other. COVID-19 has changed everything, from the dramatic shift to ecommerce buying, to consumers’ embrace of curbside pickup, to the very nature of a holiday shopping trip.
One potential change that’s received little notice but is likely to see a dramatic rise has to do with consumer claims of never receiving a package they ordered. It’s true that “item not received,” or INR, claims tend to spike during the winter holiday season every year. But the 2020 holiday season is going to be different. (Where have we heard that before?) It appears, from transaction and survey data, that a significant number of consumers are recalibrating their sense of fair play and concluding that in the time of COVID, taking advantage of online retailers is acceptable behavior.
Opportunistic porch pirates, knowing gift-giving is booming and deliveries are up, cruise neighborhoods, following UPS, FedEx and Amazon delivery trucks, scooping up packages nearly as fast as delivery workers can drop them off.
The fact is that INR claims have already been on the rise for months. And why not? Ecommerce sales have been nearly holiday-like since March when non-essential stores shut down and consumers were asked to shut in. Online sales increased 87% year-over-year in May of this year, Signifyd data shows. In September, they were still up 31% over September 2019.
False item not received claims are on the rise
When ecommerce orders rise dramatically, it makes sense that the number of INR claims would increase as well. But the increase comes with a troubling trend: Since the beginning of the pandemic, Signifyd has seen a significant increase in false INR claims on its Commerce Protection Network. In other words, many more consumers are claiming that an order never arrived even though it actually did. When those false claims aren’t detected, the end result is the consumer gets the item and a refund - and the merchant is out both.
In fact, Signifyd data shows that more than three-quarters of the INR claims processed on its network during October were determined to be false claims. That represents a 67% increase over October 2019.
The increase is stunning, but also in keeping with what consumers are telling us. In a recent survey conducted on behalf of Signifyd by market researcher Upwave, 33% of consumers admitted to having falsely claimed that an item never arrived, or that the item that did arrive was not satisfactory, in order to get a refund and keep the product.
The results of that survey were in stark contrast to a January survey that put a similar question to consumers. In January, 8% of respondents said they had claimed an item that was delivered was not delivered in order to get a refund.
And while the shift in consumer attitudes seems worthy of some hand-wringing, retailers know that hand-wringing is not going to make the problem go away.
Seven ways to avoid false item not received claims
Here are seven tips to avoid false INR claims:
- Prevention starts with relationship-building. Continue to nurture the relationships you have with customers. Become a trusted advisor and a business looking to make customers’ lives better. Provide a personal touch. Keep the lines of communication open. Respond to queries and social media posts. It is harder to cheat someone, or even a business, that you know.
- Be prepared to contest suspicious chargebacks ahead of time. Contesting chargebacks — or representment — is a quasi-judicial process. There are deadlines and standards of evidence. You don’t want to learn as you go. Have systems and processes in place to gather and catalog the paperwork and other evidence you will need to fight the claim in the time allotted.
- While you want to be ready to contest the chargebacks you believe are illegitimate, don’t overdo it. Remember #1 - build strong relationships! Few things more damaging to a merchant/consumer relationship than falsely accusing a customer of cheating.
- Consider your overall posture when it comes to contesting chargebacks: Are you willing to allow likely false claims go in order to avoid a social media firestorm? Every consumer is a publisher. Weigh the risk and reward.
- Make sure that product descriptions and images on your website are clear and accurate. A satisfied customer is much less likely to file a false claim than a customer who received an item that didn’t live up to the expectations created by a retailer’s marketing and merchandising.
- Over-index on communication. If an order is delayed, an item is out of stock, or other complications arise with an online order, let the customer know. Quickly. Your customer might be disappointed, but they’re much less likely to get angry or frustrated and take it out on you in the form of a chargeback.
- Assess the abuse and chargeback protection you have in place. Consider an automated system that relies on machine learning, big data and comes with a financial guarantee. Signifyd customers rely on the Commerce Protection Platform to shield them from the costs and headaches of chargebacks and consumer abuse. Signifyd’s Abuse Prevention solution can stop false item-not-received claims before orders even ship and provide a financial guarantee for false claims it does not stop. Signifyd also automates chargeback management, meaning an end to the scramble to build a case to win a chargeback recovery while providing protection for a full range of chargebacks.
So much is different this holiday shopping season — including its incredibly early start. But the challenges brought by COVID-19 and changing consumer habits are manageable. All it takes is a little forethought and agility and these modified retail practices will lead to success during the current pandemic and beyond.
By Mike Cassidy, Signifyd lead storyteller