Retailers can expect the holiday season to bring in 40% of their revenues, giving them a great start to the new year. 2019 ended the year with $730 billion in sales, which is a 4.1% increase over 2018. 15% of that went to online retail sales. Ecommerce sales have been steadily increasing over the past decade and haven't slowed for 2020.
2020 certainly changed how we shop. More sales were driven online due to the pandemic. While online sales benefited, brick-and-mortar sales languished. 2020 online sales for the holiday season are expected to bring in a whopping $190 billion. That's up 36% from 2019 online sales. Brick-and-mortar sales are expected to fall by 4.7% year over year.
With the ramp-up in work-from-home efforts by many companies and the big increase in online sales activity, fraud also unfortunately increased. Common retail fraud tactics included item-not-received schemes and false chargebacks, among others. Item-not-received schemes increased by 67% in October 2020 compared to 2019.
People of all stripes initiate online fraud. This includes legitimate criminals to customers trying to out-smart retailers. Customer frauds come in the form of false claims and abuse of promotions and discounts.
How can retailers protect themselves from online fraud? Requiring the CVV that is located on the back of credit cards essentially verifies that a customer knowingly used their credit card for a purchase. The CVV is not stored by retailers and must be entered in for each request/purchase. Additionally, the CVV code's use makes chargeback disputes easier for retailers to win. The CVV doesn't guarantee that fraud will not occur but should reduce the chance of it occurring.
Another method that retailers can use to prevent chargebacks is to encourage customers to contact them directly rather than going through their bank or credit card company. By sending out email receipts and follow-up feedback requests, merchants can provide information for contacting them if the customer is not satisfied with the order, potentially staving off a chargeback.
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