Top Stories
MERCHANTS UNDERESTIMATING RISKS CASTING SHADOWS OVER HOLIDAY SHOPPING SEASON

By Monica Eaton-Cardone, CIO and Co-Founder of Chargebacks911
The holiday shopping season is now well underway around the world with ecommerce sales increasing significantly as we move into the final weeks of 2016. But, while many focus on the benefits from flowing sales, the industry faces a hidden risk with a potentially huge detrimental impact on merchants and issuers alike.
In the US, the sales spree has long started on Black Friday, on the fourth Friday of November, following the Thanksgiving holiday. In 2015, a staggering USD 2.72 billion was spent online, with an additional USD 1.73 billion spent on Thanksgiving Day itself.[1]
The Black Friday trend has slowly but surely started to spread to other territories in the world, particularly the UK, where, as reported in a Global Risk Technologies whitepaper, the holiday has grown massively since 2014. In 2015, the UK topped GBP 1 billion in Black Friday sales, and Cyber Monday — which transforms Black Friday into a four-day-weekend long online shopping extravaganza — helped bring total sales to GBP 3.3 billion.[2]
The biggest online shopping days for Christmas in Europe typically fall between 7 and 11 December, often coinciding with the last date to guarantee on-time delivery of seasonal gifts. Last year on 7 December, an estimated EUR 517 million was spent online in Germany and EUR 341 million in France.
Yet, neither Europe nor the US’online shopping events can compare with the online spending frenzy of China’s relatively new ‘Singles Day’ phenomenon. What started in the 1990s as an obscure “anti-Valentine’s” celebration for single people in China, has spawned into the world’s biggest online shopping day. Ostensibly held on 11 November, but often extending to a week-long sale, this year the holiday set a new sales record of CNY 120.7bn (USD 23.39bn, around GBP 18.76bn) in just one day.[3]
While these world record-breaking sales create great headlines, huge amounts of attention from customers, and increased earning potential for merchants, statistics reveal dire consequences–in terms of chargebacks—are likely to follow.
Chargeback volumes can increase by as much as 50% during the holiday season,[4] and the trend is likely to continue growing. But, what is causing this?
One of the biggest problems most closely associated around peak shopping days is buyer’s remorse. Customers feel pressured into buying something before it disappears, but then change their minds or find a better deal elsewhere and no longer want the product. This regret often results in illegitimate chargebacks for customers trying to find another way to get a ‘refund’.
Similarly, if customers are having a bad shopping experience and are not satisfied with the merchant’s performance, they may also initiate a chargeback. A new report from Radial indicated that 71% of shoppers expect their online orders to arrive within five days, while 51% would stop shopping with a retailer if their order arrived later than the promised delivery date.[5]
Also augmenting the problem, concerning ecommerce, is a misconception regarding where fraudulent chargebacks are originated. Even though fighting cybercriminals and protecting the identity and data of customers should be a priority, fraudulent purchases are surprisingly low on Black Friday, Cyber Monday and Singles Day. Only 10% of chargebacks can be attributable to criminal fraud, with 20% coming from merchant error and 70% from friendly fraud,which occurs when a consumer makes an online shopping purchase with their own credit card, and then requests a chargeback from the issuing bank after receiving the purchased goods or services.This is a problem which is not properly been addressed by many retailers.
Adding to these reasons, the industry is also slow to react. Merchant liability often surfaces in the weeks following these shopping holidays – approximately 90 days after the purchase — as the costs of online fraud and chargebacks become apparent. Big purchasing events, like Black Friday, can significantly alter normal customer shopping behaviours, making it a challenge to find and stop friendly fraud.
Sales are often seen as more important, but merchants can lose the value of the sale, as well as the cost of the goods and a chargeback fine – essentially making a greater loss.
This burden is not only owned by online merchants.Issuers are getting increasingly serious about enforcing better governance on them.Ineffective or poor chargeback management is about to become even more costly.
MasterCard recently took action to help reduce their own encumbrance by introducing their new Dispute Administration Fee (DAF). The DAF is a fee passed through to merchants who fall foul of customer chargebacks and fail to effectively dispute their legitimacy. Ecommerce merchants can expect to pay an additional EUR 15 fee for chargebacks they accept without filing rebuttal, and up to EUR 30 if a non-compliant response is filed. Issuers are penalised as well with the reverse incentive.
As this year’s shopping frenzy progresses, merchants who lack a disciplined chargeback policy are likely to be more vulnerable than ever before.In order to avoid this, retailers need to understand chargebacks and the detrimental affect an ineffective risk mitigation system can have on their business. Beyond losing merchandise and revenue, internet retailers can face additional fees and consequences, particularly if they exceed allotted chargeback thresholds.
Adhering to best practices reduces the risk of chargebacks, however; superior results are obtained through the use of combined methods which leverage both in-house and outside expertise.Based on recent studies performed by Global Risk Technologies, merchants using a combination of fraud management strategies experienced improved performance within every fraud detection tool and reported a gain on average of 22.4% over those who did not utilise a layered approach or combination method.
Retailers needn’t resign and accept chargebacks as a cost of doing business. Acknowledging the problem and putting in place comprehensive management strategies can ensure merchants benefit from huge shopping days without sustaining enormous financial disasters.
Top Stories
Airbus CEO urges trade war ceasefire, easing of COVID travel bans

By Tim Hepher
PARIS (Reuters) – The head of European planemaker Airbus called on Saturday for a “ceasefire” in a transatlantic trade war over aircraft subsidies, saying tit-for-tat tariffs on planes and other goods had aggravated damage from the COVID-19 crisis.
Washington progressively imposed import duties of 15% on Airbus jets from 2019 after a prolonged dispute at the World Trade Organization, and the EU responded with matching tariffs on Boeing jets a year later. Wine, whisky and other goods are also affected.
“This dispute, which is now an old dispute, has put us in a lose-lose situation,” Airbus Chief Executive Guillaume Faury said in a radio interview.
“We have ended up in a situation where wisdom would normally dictate that we have a ceasefire and resolve this conflict,” he told France Inter.
Boeing was not immediately available for comment.
Brazil, which has waged separate battles with Canada over subsidies for smaller regional jets, on Thursday dropped its own complaint against Ottawa and called for a global peace deal between producing nations on support for aerospace.
Faury said the dispute with Boeing was particularly damaging during the COVID-19 pandemic, which has badly hit air travel and led to travel restrictions or border closures. He expressed particular concern about widening bans within Europe.
“We are extremely frustrated by the barriers that restrict personal movement and it is almost impossible today to travel in Europe by plane, even domestically,” he said.
“The priority no. 1 for countries in general is to reopen frontiers and allow people to travel on the basis of tests and then eventually vaccinations.”
The comments come as businesses increase pressure on governments to reopen economies as coronavirus vaccine roll-outs gather pace across Europe.
France has defended recently introduced border restrictions, saying they will help the government avoid a new lockdown and stay in force until at least the end of February.
Germany installed border controls with the Czech Republic and Austria last Sunday, drawing protest from Austria and concerns about supply-chain disruptions.
Berlin calls the move a temporary measure of last resort.
Poland said on Saturday it had not ruled out imposing restrictions at the country’s borders with Slovakia and the Czech Republic due to rising COVID-19 cases.
(Reporting by Tim Hepher; Editing by Kirsten Donovan)
Top Stories
Why a predictable cold snap crippled the Texas power grid

By Tim McLaughlin and Stephanie Kelly
(Reuters) – As Texans cranked up their heaters early Monday to combat plunging temperatures, a record surge of electricity demand set off a disastrous chain reaction in the state’s power grid.
Wind turbines in the state’s northern Panhandle locked up. Natural gas plants shut down when frozen pipes and components shut off fuel flow. A South Texas nuclear reactor went dark after a five-foot section of uninsulated pipe seized up. Power outages quickly spread statewide – leaving millions shivering in their homes for days, with deadly consequences.
It could have been far worse: Before dawn on Monday, the state’s grid operator was “seconds and minutes” away from an uncontrolled blackout for its 26 million customers, its CEO has said. Such a collapse occurs when operators lose the ability to manage the crisis through rolling blackouts; in such cases, it can take weeks or months to fully restore power to customers.
Monday was one of the state’s coldest days in more than a century – but the unprecedented power crisis was hardly unpredictable after Texas had experienced a similar, though less severe, disruption during a 2011 cold snap. Still, Texas power producers failed to adequately winter-proof their systems. And the state’s grid operator underestimated its need for reserve power capacity before the crisis, then moved too slowly to tell utilities to institute rolling blackouts to protect against a grid meltdown, energy analysts, traders and economists said.
Early signs of trouble came long before the forced outages. Two days earlier, for example, the grid suddenly lost 539 megawatts (MW) of power, or enough electricity for nearly 108,000 homes, according to operational messages disclosed by the state’s primary grid operator, the Electric Reliability Council of Texas (ERCOT).
The crisis stemmed from a unique confluence of weaknesses in the state’s power system.
Texas is the only state in the continental United States with an independent and isolated grid. That allows the state to avoid federal regulation – but also severely limits its ability to draw emergency power from other grids. ERCOT also operates the only major U.S. grid that does not have a capacity market – a system that provides payments to operators to be on standby to supply power during severe weather events.
After more than 3 million ERCOT customers lost power in a February 2011 freeze, federal regulators recommended that ERCOT prepare for winter with the same urgency as it does the peak summer season. They also said that, while ERCOT’s reserve power capacity looked good on paper, it did not take into account that many generation units could get knocked offline by freezing weather.
“There were prior severe cold weather events in the Southwest in 1983, 1989, 2003, 2006, 2008, and 2010,” Federal Energy Regulatory Commission and North American Electric Reliability Corp staff summarized after investigating the state’s 2011 rolling blackouts. “Extensive generator failures overwhelmed ERCOT’s reserves, which eventually dropped below the level of safe operation.”
ERCOT spokeswoman Leslie Sopko did not comment in detail about the causes of the power crisis but said the grid’s leadership plans to re-evaluate the assumptions that go into its forecasts.
The freeze was easy to see coming, said Jay Apt, co-director of the Carnegie Mellon Electricity Industry Center.
“When I read that this was a black-swan event, I just have to wonder whether the folks who are saying that have been in this business long enough that they forgot everything, or just came into it,” Apt said. “People need to recognize that this sort of weather is pretty common.”
This week’s cold snap left 4.5 million ERCOT customers without power. More than 14.5 million Texans endured a related water-supply crisis as pipes froze and burst. About 65,000 customers remained without power as of Saturday afternoon, even as temperatures started to rise, according to website PowerOutage.US.
State health officials have linked more than two dozen deaths to the power crisis. Some died from hypothermia or possible carbon monoxide poisoning caused by portable generators running in basements and garages without enough ventilation. Officials say they suspect the death count will rise as more bodies are discovered.
THIN POWER RESERVE
In the central Texas city of Austin, the state capital, the minimum February temperature usually falls between 42 and 48 degrees Fahrenheit (5 to 9 degrees Celsius). This past week, temperatures fell as low as 6 degrees Fahrenheit (-14 degrees Celsius).
In November, ERCOT assured that the grid was prepared to handle such a dire scenario.
“We studied a range of potential risks under both normal and extreme conditions, and believe there is sufficient generation to adequately serve our customers,” said ERCOT’s manager of resource adequacy, Pete Warnken, in a report that month.
Warnken could not be reached for comment on Saturday.
Under normal winter conditions, ERCOT forecast it would have about 16,200 MW of power reserves. But under extreme conditions, it predicted a reserve cushion of only about 1,350 MW. That assumed only 23,500 MW of generation outages. During the peak of this week’s crisis, more than 30,000 MW was forced off the grid.
Other U.S. grid operators maintain a capacity market to supply extra power in extreme conditions – paying operators on an ongoing basis, whether they produce power or not. Capacity market auctions determine, three years in advance, the price that power generators receive in exchange for being on emergency standby.
Instead, ERCOT relies on a wholesale electricity market, where free market pricing provides incentives for generators to provide daily power and to make investments to ensure reliability in peak periods, according to economists. The system relied on the theory that power plants should make high profits when energy demand and prices soar – providing them ample money to make investments in, for example, winterization. The Texas legislature restructured the state’s electric market in 1999.
LOOMING CRISIS
Since 2010, ERCOT’s reserve margin – the buffer between generation capacity versus forecasted demand – has dropped to about 10% from about 20%. This has put pressure on generators during demand spikes, making the grid less flexible, according to North American Electric Reliability Corporation (NERC), a nonprofit regulator.
That thin margin for error set off alarms early Monday morning among energy traders and analysts as they watched a sudden drop in the electrical frequency of the Texas grid. One analyst compared it to watching the pulse of a hospital patient drop to life-threatening levels.
Too much of a drop is catastrophic because it would trigger automatic relay switches to disconnect power sources from the grid, setting off uncontrolled blackouts statewide. Dan Jones, an energy analyst at Monterey LLC, watched from his home office in Delaware as the grid’s frequency dropped quickly toward the point that would trigger the automatic shutdowns.
“If you’re not in control, and you are letting the equipment do it, that’s just chaos,” Jones said.
By Sunday afternoon about 3:15 p.m. (CST), ERCOT’s control room signaled it had run out of options to boost electric generation to match the soaring demand. Operators issued a warning that there was “no market solution” for the projected shortage, according to control room messages published by ERCOT on its website.
Adam Sinn, president of Houston-based energy trading firm Aspire Commodities, said ERCOT waited far too long to start telling utilities to cut customers’ power to guard against a grid meltdown. The problems, he said, were readily apparent several days before Monday.
“ERCOT was letting the system get weaker and weaker and weaker,” Sinn said in an interview. “I was thinking: Holy shit, what is this grid operator doing? He has to cut load.”
Sinn said he started texting his friends on Sunday night, warning them to expect widespread outages.
‘SECONDS AND MINUTES’
Early Monday morning, one of the largest sources of electricity in the state – the unit 1 reactor at the South Texas Nuclear Generating Station – stopped producing power after the small section of pipe froze in temperatures that averaged 17 degrees Fahrenheit (9 degrees Celsius). The grid lost access to 1,350 MW of nuclear power – enough to power about 270,000 homes – after automatic sensors detected the frozen pipe and protectively shut down the reactor, said Victor Dricks, a spokesman for the U.S. Nuclear Regulatory Commission.
About 2:30 a.m. (CST), the South Plains Electric Cooperative in Lubbock said it received a phone call from ERCOT to cut power to its customers. Inside the ERCOT control room, staff members scrambled to call utilities and cooperatives statewide to tell them to do the same, according to operational messages disclosed by the grid operator.
Three days later, ERCOT Chief Executive Bill Magness acknowledged that the grid operator had only narrowly avoided the calamity of uncontrolled blackouts.
“If we hadn’t taken action,” he said on Thursday, “it was seconds and minutes (away), given the amount of generation that was coming off the system at the same time that the demand was still going up.”
(Reporting by Tim McLaughlin and Stephanie Kelly; additional reporting by Nichola Groom; editing by Simon Webb and Brian Thevenot)
Top Stories
UK could declare Brexit ‘water wars’ – The Telegraph

(Reuters) – Britain could restrict imports of European mineral water and several food products under retaliatory measures being considered by ministers over Brussels’ refusal to end its blockade on British shellfish, the Telegraph reported.
Senior government sources pointed to potential restrictions on the importing of mineral water and seed potatoes, the report said.
(Reporting by Maria Ponnezhath in Bengaluru; Editing by Daniel Wallis)