Notice of Chargeback
This notice is always disheartening for a merchant to receive. Your hard-earned profits are sucked out of your bank account with no opportunity to explain your side before the money is removed. If you take too long to respond, you could lose the dispute simply for not responding in time. If you fail to respond at all, it can be considered a black mark against your business.
If you are new to accepting credit cards or have just been lucky enough to have never received one, here’s what a chargeback is: a claim levied against a merchant whenever a customer contests a specific transaction on a credit card statement. They can be costly, they consume your time gathering up documentation or evidence, and they cause anxiety.
Here are some of the most common reasons that consumers initiate chargebacks and how you can avoid them.
Fraud
Unfortunately, many chargebacks are initiated with an intent to commit fraud. Some studies suggest that these types of chargebacks compose 50% of all chargebacks, while others say that number is as high as 86%. These are people who use their credit card to obtain goods or services that they then claim they never received. Your best combat against this type of fraud is to use an EMV chip reader. Internet and phone sales have a much higher rate of fraud than in-house terminal sales.
“I Never Got It”
While also considered fraud, many people order products and then claim they never received the product you shipped. Your best solution to this is to always request a “Proof of Delivery” signature. This type of service is offered by all major carriers such as Fed Ex and UPS and will even show the time and location a package was delivered.
If you are providing a service, like a moving and storage company, make sure your clients sign the BOL (Bill of Lading) and agrees to the pricing and policies outlined on the BOL by signing and initialing accordingly.
Mistakes Happen
Sometimes a chargeback might be legitimate because of a mistake. If you inadvertently charge your customers twice for the same item or charge a price that is different than the advertised or agreed upon price, they may initiate a chargeback. Mistakes like this are easily fixed. Make sure you respond to the chargeback notice and acknowledge the mistake was made and that you have no dispute in the chargeback. Failing to respond to a chargeback notice is almost an admission of guilt that you got caught.
“Who Are You?”
Sometimes customers dispute a charge because they don’t recognize the name printed on their statement. This is especially common if you use a “DBA” name on your storefront and but have a different legal name that shows up on the customer’s statement. Your credit card processor can easily change this information to display a recognizable name as well as displaying your phone number so your customers can call you first and ask about a charge before initiating a dispute.
“It’s Not What I Expected”
This is excuse might be used to circumvent your refund policy if a customer decides to return something and you won’t take it back. Some consumers are just too embarrassed or shy to discuss their concerns and initiate a chargeback instead. If you feel this is the case, your credit card processor should be able to assist you with a defense. At Remedy Payment Solutions we win nine out of ten of these types of chargebacks for our merchants. Make sure that your return and refund policy are clearly stated on any document your customer signs as well as on printed receipts.
A signed BOL indicating the client agreed to the terms of service and agreed all services were rendered as agreed. Additionally, the BOL should have a release of liability indicating all goods were not damaged.
If you would like to learn more about a credit card company that will fight for you, please call us at 714-461-2200.