The line between online and brick-and-mortar shopping has blurred over the past few years. Many customers now prefer using “Buy Online Pick-up in Store” (BOPIS) methods. Not into grocery shopping? Some stores allow you to put an order in online, then you can pick it up, already packed, at the grocery store. Want the latest electronics but don’t feel like waiting for an online retailer to ship it to you? Many electronic shops allow you to order online and pick up in-store, same day.
More shopping methods can be great for customers and stores alike. For shoppers, BOPIS combines the conveniences of both online and real-world shopping. Merchants, meanwhile, may widen their audience and adding convenience to customers can drum up sales.
Unfortunately, BOPIS can cause some hassles for merchants, including chargebacks. Indeed, BOPIS often attracts fraudsters. In fact, BOPIS transactions result in a 7 percent attempted fraud rate. Other purchasing methods? Just 4.6 percent.
So should businesses simply ignore BOPIS? That’s one option, but doing so may cost you many legitimate shoppers. As a result, you could quickly fall behind the competition.
Fortunately, merchants can leverage dispute management platforms and fraud/chargeback reduction strategies to reduce fraudulent transactions while still offering Buy Online Pick-up In Store shopping. We’ll look at how businesses can protect themselves from chargebacks and other types of fraud stemming from BOPIS.
First, let’s examine why BOPIS appears to lead to more criminal activity.
Why BOPIS Leads To More Fraud
When you envision criminals gaming online shopping sites, you might first think of hackers. Sadly, hackers are a major threat, and some are responsible for BOPIS and online fraud.
Yet many of the fraudsters engaging in BOPIS fraud use social engineering instead. Someone could simply walk into a store, chat with the staff, and then get them to hand over goods they never ordered. Then the legitimate customer shows up looking for their order, only to find out it’s gone.
This also opens the door for first-party fraud and chargebacks in particular. With first-party fraud, a card holder might make a purchase, claim something went wrong with the order, then file a chargeback. For example, the cardholder could argue that someone else picked up their order.
Staff at the store could argue that they did everything right, but card-issuing banks ultimately approve or reject chargebacks, and they tend to side in the customer’s favor unless the merchant has sound evidence. The retailer can dig up video evidence if they have cameras set up. But that takes time. And if the customer was wearing say an N95 mask or a hat, the video recorders might not have caught a good glimpse.
Traditional hacking methods remain serious threats as well. One popular strategy for hackers is to use account takeover. They may convince an account holder to hand over their login credentials, say using a phishing email and pretending to be the customer service department of the website the user has an account with. Or they might use brute force attacks, trying commonly used passwords at random to see if they can luck into the account. They could also dig up login credentials from data breaches.
Once the criminals abscond with the account login info, they can place orders using saved payment methods. With BOPIS, they can put in the purchase, then pick it up the same day before either the customer or the website admins realize the account’s been hacked.
BOPIS is especially vulnerable to account takeover because the hacker can use the account holders billing and shipping addresses. With shopping on the web, the fraudster typically uses a receiving address where they can pick up the goods. A shipping address different from the account holder’s typical address is a major red flag that online merchants can watch for. BOPIS offers an easy way around this red flag.
What Can Businesses Do To Fight BOPIS Related Fraud?
BOPIS fraud is a serious risk but retailers and other businesses can implement a number of strategies and leverage various tools to ward off criminals, including dispute management platforms and consulting with experienced business fraud lawyers. By reducing chargebacks, entrepreneurs can protect their business both right now and in the future. Chargeback fees and penalties can increase over time and become untenable if left unchecked.
Train Your Staff To Watch For Fraud
Training your staff to watch for fraud is vital. Often, workers are on the frontline in the fight against crime. This is especially true for brick-and-mortar businesses, including those that offer BOPIS. It’s important to teach employees about social engineering and other tactics fraudsters use to commit their crimes.
Let Potential Fraudsters Know You’re Watching
A simple “smile, you’re on camera” sign might deter criminals. If would-be thieves know that they’re being recorded, they might be less likely to commit a crime. You can put up signs at your customer service department or in-store pick up point to let fraudsters know they are being watched. And rather than making cameras hidden, make at least some of them highly visible.
Always Ask For IDs When Someone Picks A Purchase Up
Whenever someone arrives to pick up the purchase in store, make sure you ask for an ID. If they don’t have an ID, you may want to refuse to hand over the goods. On your checkout page and any emails you send out after a sale, mention that an ID will be required.
Fight Chargebacks With Dispute Management Platforms
Sadly, even with strong anti-fraud measures, fraud can get through and you will still end up hit with chargebacks. With a chargeback, cardholders can skip working with the business and instead ask their back to return their money. You could use alerts that will warn you of pending chargebacks. Sometimes it’s possible to resolve a chargeback before it is filed, say by offering a refund.
If the chargeback progresses, you could fight it by drafting a chargeback rebuttal letter, in which you argue that the purchase was legitimate and that you did everything right on your end. Dispute management platforms like Chargeback Help make it easy to track deadlines, gather evidence (like IP addresses), and otherwise re-present a compelling case.
A Proactive Approach Can Reduce BIPOS Related Fraud
No matter the specific tactics and tools used, it’s important to proactively confront criminal activity stemming on BOPIS. If you don’t, you may suffer more fraud, lose revenue, and get hit with chargebacks and the associated fees/processing costs. Fraud may seem like a minor threat, but it can cost money and time you could otherwise apply to your core business.
