Receiving a Notice of Chargeback is always disheartening for a merchant to receive. Your hard-earned money was sucked out of your bank account with no opportunity to explain your side before the money was removed. If you take too long to respond, you could lose the dispute for not responding in time. If you fail to respond at all, it can be considered a black mark against your business. If you have too many chargebacks or unanswered chargebacks, you could be banned from accepting credit cards through any Merchant Services Provider.
What is a Chargeback?
If you are new to accepting credit cards or have just been lucky enough that you have never received a chargeback, let us explain what a chargeback is. The term describes a claim levied against a merchant whenever a customer contests a specific transaction on their credit card statement. They can be costly and consume your time gathering up documentation or evidence to prove your right to the money removed from your account. There is no doubt, 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 a specific intent to commit fraud. Some studies suggest that these types of chargebacks comprise 50% of all chargebacks while others say that number is as high as 86%. These are people who use a credit card to obtain goods or services that they claim they never received, or they use a stolen credit card number. 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 so take extra steps to confirm the transaction by using the AVS system, calling the customer back to confirm a working phone number and if in doubt, call the Merchant Hotline and share any suspicious activity. They will call the issuing bank, who will call the cardholder and verify their participation in the transaction.
“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 to and who signed for it.
Mistakes Happen
Sometimes a chargeback might be legitimate because of a mistake. If you inadvertently charge your customer twice for the same item or charge a price that is different from 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 any chargeback notice is almost an admission of guilt that you got caught cheating a customer.
“Who Are You?”
Sometimes customers dispute a charge simply because they don’t recognize the name printed on their credit card statement. This is especially common if you use a “DBA” name on your storefront 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 that your customers can call you first and ask about a charge before initiating a dispute. This is called a descriptor and your Merchant Service Provider can modify this information for you.
“It’s Not What I Expected”
This excuse might be used to circumvent your refund policy if a customer decides they don’t like 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 Aurora Payments, we win nine out of ten of these types of chargebacks for our merchants by providing the documentation needed for the win. Make sure that your return and refund policy are clearly stated on any document your customer signs as well as posted in your business at the point-of-sale.
Who is Aurora?
Aurora Payments is a network of professionals providing Merchants with reliable payment solutions for any industry and any environment. We help businesses increase efficiency and growth. Our proprietary technology provides One Ecosystem - One Contract - One Partner - One Aurora. As a Full-Service Provider (FSP), we have all the products, services, solutions, and support Merchants need - all-in-one place. We’re an organization driven by a passion for helping our Merchants succeed. Interested in learning how you can eliminate credit card processing fees? Send us an email at hello@risewithaurora.com or call us at 833-287-6722. You’ll be saving money in no time!
