Remember the small local grocer or family-owned corner store? The owner and the staff knew most everyone who came in. Conversations carried on, big and small issues were discussed, and relationships were built. The customers at these stores knew who they were buying from, and this created a level of trust and open communication. Problems were solved easily and openly and rarely did the customer leave in anger, nor was the merchant forced to deal with a formal complaint.
Transaction disputes or friendly fraud simply didn’t happen in these businesses. There was no reason for it: customers knew they could get their purchase problems resolved with a discussion with their local merchant.
Today, this kind of community relationship is disappearing. With CNP and m-commerce business models, this customer-merchant relationship is evolving into something less informal, if not merely incidental. It’s rare that a customer knows who they’re buying from online, and merchants rarely have a chance to directly communicate with their customers.
Friendly Fraud and Modern Business
This shift in business practices has allowed for the rapid advancement of friendly fraud. Customers less frequently contact a merchant directly with a dispute; in fact, they’ve come to believe they have no choice but to contact their credit card issuer and file a chargeback. Merchants are left dealing with lost revenue, lost customers, confusion and disappointment over how the sale ended in a chargeback.
Typically, many friendly fraud chargebacks are not filed out of malicious intent. They’re filed because the customer doesn’t know what else to do. Often, customers don’t understand the ramifications of filing a chargeback—or what they are doing is called filing a chargeback. The customer just knows that they have a problem and they want it solved quickly and easily.
Helping Customers Help Themselves
The solution to this modern business problem is to build a new kind of foundation of trust and communication with your customers. By inviting and opening the lines of communication, customers feel empowered to contact merchants about problems and are less likely to react with a disputed transaction.
With simple changes in customer-faced messaging, merchants can eliminate the perception of invisibility that underlies the current CNP customer-merchant relationship.
- Better contact information. Clear and obvious contact information is a must. Make sure customers know whom to contact and instill their confidence that their email will receive a response.
- Respond to customers. Nothing fuels a customer’s frustration more than emailing a merchant and not receiving a response. Merchants must respond to customer emails quickly and do their best to alleviate concerns.
- Get personal. Build a relationship with customers. Follow up with emails after their purchase. Ensure their purchase satisfaction and ask if they have any questions, suggestions for improvements, etc.
- Social media outreach. Customers use social media tools to provide feedback, reviews, and complaints about the merchant. Merchants would do well to do the same: engage in conversations, respond to feedback, and follow up with customers who post on social media channels. Thank customers for supporting the business, and possibly provide promotional bonuses for those who do reach out.
Customers need the assurance that their problems are best solved by contacting the merchant directly. The common reasons for friendly fraud chargebacks—owing to customer confusion over an order, having forgotten the purchase made, or the product not being as described—should be resolved with emails, conversations, and open communication.
The pressure is on merchants to foster this relationship. Be visible, communicate openly, and strive to build a platform of trust for your customers. Not only will this open communication make it easier for you to foster better customer relations, but this increase in merchant visibility will also lead to a decrease in transaction disputes and costly chargebacks.