Chargeback 911's Annual Report: Top Insights Every Seller Needs

Chargebacks are a growing concern for merchants across all industries. Friendly fraud impacts both revenue and reputation, causing frustration and losses for honest sellers. In Chargeback911's recent survey, they explored the experiences and perceptions of businesses regarding disputes, revealing critical insights into the challenges and strategies employed to mitigate risks. As online shopping rises, understanding the dynamics of chargebacks is essential for sellers looking to protect their bottom line and maintain customer trust. 

5 Quick Takeaways

1. Nearly half of respondents estimated that friendly fraud was responsible for 50 percent or more of their chargebacks.

2. Recovering revenue from wrongly filed chargebacks and reducing overall chargeback rates has become a major area of focus for online merchants. 

3. The majority of respondents said they challenge at least some chargebacks.

4. Merchants often fail to track second cycle chargebacks, meaning their recovery rates are often much lower than they believe. 

5. Participants estimated that nearly one-quarter of their refunds were fraudulent.

What can sellers do? 

1. A third of respondents said they did not know how their billing descriptor appears on customer billing statements. ALL AuctionNinja sellers should review their static pages and authorize terms to review their billing information. Sellers also MUST review their terms and conditions for each sale, and each post auction option. 

CLICK HERE to learn about post auction options. 

CLICK HERE to learn about your static pages. 

2. New payment methods increase fraud risk. Methods like wire transfers or payment promises at pickup often require sellers to trust that bidders will fulfill their payment responsibilities.

3. According to Chargebacks911’s survey, one-third of participants reported that the costs associated with chargebacks have directly impacted how they price the services provided. This directly interacts with seller’s choice to increase or decrease their buyer’s premium. Consider this when posting your next auction. 

4. A high number of merchants estimated their average dispute value was larger than their average transaction value. Chargeback911 went on to explain that, for a business with an average transaction rate of $135, their average transaction ending in a dispute was $192. Meaning, higher than average transactions have a higher risk of dispute. Sellers should ALWAYS require a photo ID for larger transactions.

What does this look like?

Sellers need to prove that bidders are in possession of the property they purchased, as well as clearly stated protocol for abandoned items. Part of your pickup terms should include a section about how your business handles items that are not removed during the allotted time. 

Sellers can look to expert online auctioneers for great ideas on coherent terms and conditions. Buy items from our seasoned experts and go to their pickups! See how other people operate and ask what works for them.

This works great for pickup, but what about shipping? 

When it comes to shipping items, effective record keeping is crucial. Enhance security by requesting that your bidders provide a picture of their photo ID prior to sending expensive parcels. Additionally, verifying the bidder's address can help prevent issues. Before printing label, consider sending a text to confirm the details and keep a record of that communication for your files.

Dispute prevention is a vital aspect of maintaining a healthy business. By implementing proactive strategies such as clear communication and thorough record keeping, merchants can significantly reduce their risk of chargebacks. Understanding customer concerns and addressing them promptly not only safeguards revenue but also fosters trust and loyalty. As e-commerce continues to evolve, staying informed and adapting best practices will empower sellers to navigate the challenges of chargebacks effectively and thrive in their markets.

Written by:

Juli Dupont

October 8, 2024     Updated 01:10 PM

Juli is the customer success guru at AuctionNinja, specializing in helping sellers achieve maximum success on the platform. With a background in the estates and acquisitions department at AuctionNinja's parent company, BRG, Juli possesses a deep understanding of the challenges and dynamics of the auctioneering and estate selling industry. Her expertise makes her the go-to person for sellers navigating the ever-changing marketplace. Juli holds a Bachelor of Arts degree in English.

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