Chargebacks

Accepting credit cards as payment in your business transactions is a very promising concept. You can increase your revenue, your customer base and improve productivity. By simply getting yourself a merchant account to be able to accept cards for payments, you are adding convenience, cost-effectiveness and a professional image right into your business. If you have already taken this big leap, you probably have experienced how confusing credit card processing can be. There are quite a number of things that you might need to know and remember. Although the entire process can, with time, get to be fairly easy to get around in, there is one important aspect about merchant accounts that you need to know very well - chargebacks.

 

What is a Chargeback?

As you know, customers or cardholders obtain credit cards from banks, which are referred to as the "issuing bank." A chargeback (also known as a reversal) is a form of customer protection provided by the issuing banks, which allows cardholders to file a complaint regarding fraudulent transactions on their statement. Once the cardholder files a dispute, the issuing bank makes an investigation into the complaint. Once the transaction is proven to be indeed fraudulent, the bank will refund the original value to the cardholder. From the merchant's point of view, if you do not prove the transaction to be legitimate, the bank will take back the entire value of the transaction from your account, along with an additional fee. This chargeback fee will range from $0 to $100, depending on the merchant bank sponsoring your account. If the cardholder complaint is proven untrue, no refund is requested from the merchant, though additional processing fees may be charged. For obvious reasons, it is best for your business not to get involved with chargebacks. With situations like these, the merchant stands the risk of losing products or services that have already been sold, the payment, the fees incurred for payment processing, money for chargeback penalty, or even possible commissions for currency conversions. It is thus best to avoid chargebacks at all times. Also, note that merchant accounts receiving too many chargebacks can be labeled by credit card companies as fraudulent, and this can be potentially damaging to the image and the existence of your business. Know also that credit card issuing banks take chargebacks seriously, because they are at the most advantage. They don't only levy fees, but they can also hold merchant remittance up to three months to cover the fraud, or increase their commissions if they choose to label your account "risky."

By law the cardholder has two years to file a dispute. Your sales can be reversible for two years... That means saving documentation for two years... Most banks will have a policy against handling disputes that are more than six months old but if the cardholder pushes it they have two years to file a dispute.

Reasons for Chargeback

As a merchant, you have to be fully aware of the most common reasons why merchants receive chargebacks. These are the circumstances that you also need to avoid at all costs. Note that most, if not all, chargebacks are initiated by cardholders. These are primarily due to inconsistencies in their credit card statements.
Fraudulent Transactions
The most common cause for chargeback is fraudulent transactions. This happens when the credit card is used without the authorization and consent of the cardholder. In cases like these, the merchant is held solely responsible.

Credit Not Processed
Another common type of chargeback occurs when the customer may have returned the merchandise to the merchant (e.g. when the cardholder receives an item different from what he expected), requested to get their money back but said credit was not posted to their account. In these situations, merchants are also held liable for the charges.

Item Not Received
This is one of the most commons reason for chargebacks today. This happens when the customer did not receive the item which they paid for by credit card. As in the previous situations, the merchant is charged accordingly.

Technical Problems
Many chargeback requests are due to technical problems during the payment processes. Technical problems between the issuing bank and the merchant may lead to cardholders being charged twice for the same transaction (termed as duplicate processing). Problems with the authorization process can also lead to account being charged, even if the transaction was declined.

These are the four main reasons for chargebacks. There are a few more detailed reasons, which can be attributed to situations such as faulty cards and human errors made during the payment process. These cases, however, may be beyond your control as a merchant.

The Chargeback Process

It can sometimes be difficult to stay away from chargebacks. What must you do when it happens to you? It is good to take a look at what to expect when a chargeback request against you is requested by a cardholder. It is unfortunate that many merchants are actually not aware of the tedious process that they need to go through. Here is the entire process laid out in a step-by-step manner:
Step 1: The cardholder files a complaint by contacting his or her issuing bank about the erroneous transaction.

Step 2: The issuing bank checks whether the dispute is valid. If the bank finds the request invalid, the dispute is simply declined and the customer is charged with a processing fee.

Step 3: If the issuing bank sees a potential error, a provisional credit is provided to the cardholder. The bank then initiates the usual chargeback process, to obtain credit from the merchant's sponsoring bank.

Step 4: The merchant bank sponsoring the account then checks whether the chargeback is valid or not. They usually send you a notification to inform you of a pending chargeback request.

Step 5: The merchant's sponsoring bank then does some research on the validity of the chargeback claim. If the chargeback is found to be invalid, they will decline said chargeback and inform the card-issuing bank.

Step 6: Assuming the chargeback is invalid, the amount of the chargeback is removed from the merchant's account and the merchant's bank will notify the merchant about the outcome.

Step 7: If a processing error has indeed occurred, the corresponding correction is then sent to the card-issuing bank for re-presentation.

Step 8: The merchant will be asked to provide the needed documentation and proof to remedy the chargeback. If the documentation provided is satisfactory, the claim for chargeback is denied and the customer will be charged once again for the sale. If the documents seem to be unsatisfactory, the chargeback amount will be provided to the customer.

As is probably obvious, the chargeback process is a very complicated one and involves a number of different parties to remedy the chargeback. As a merchant,it will take some time to manage and remedy a chargeback. A typical chargeback process lasts anywhere from 6 weeks to up to 6 months. If eachstep takes the maximum amount for completion, then it should not be surprising for a chargeback to pressure you for what will seem like forever.

The Cost of Chargebacks

Though accepting credit card payments is beneficial to a business, chargebacks can cause major drawbacks. If a customer disputes a transaction for one reasonor another, you will have to go through a rather complicated process, which not only loses you a sale, but costs you otherwise unnecessary fees. Chargebacks involve quite a number of stringent processes and complex procedures, which may end up with you on the losing end.

Credit card online transactions are considered to be CNP or Card Not Present transactions. Generally, a merchant account agreement specifies that the merchant will be 100% liable for any type of possible online fraud that might happen. Sadly, whether it is an actual fraudulent transaction, or a case of malicious attempt by a cardholder, the merchant will have to face the consequences. If it is determined that there is not enough proof to back up the transaction, the merchant will lose the sale and will be subjected to chargeback fees, which will range anywhere from $30  to $50 or even more. Moreover, say you shipped the merchandise to your customer through overnight shipping; you will have lost another the sales revenue you lost.
It is unfortunate that online fraud, or fault on the side of the merchant, is not the usual cause of chargebacks. Credit card institutions are usually focused onkeeping their cardholders happy. They also would like customers to be appeased so that they continue use their cards to make purchases online. Theseinstitutions value their cardholders' best interests, such that any form of dissatisfaction or complaint usually results in chargebacks - all at the expense of honest merchants.
The cost of chargebacks does not end only in losses in financial aspects. Racking up chargebacks has even worse consequences on the part of the merchant. During physical transactions, where both the cardholder and the card are present, it is the credit card institutions who take sole responsibility in cases of chargebacks. However, during online CNP transactions, merchants are solely responsible. Having too many cases of chargebacks will lead to steeper chargeback fees, as you will become labelled by the credit card institution as a highrisk merchant.
Not only that, but having an excessive number of chargebacks can also lead to the potential termination of your online account. This will cripple your ability to accept credit card payments, and can lead to severe losses to your business. It is important to note that merchant accounts that become suspended due to high number of chargebacks are almost always impossible to restore. If you are a small business operating on rather thin profit margins, chargeback fees, increases and suspension will all have detrimental effects. Even if you keep your chargebacks to only 1% of your charges, the chargebacks
you receive will still require you to spend time in retrieving details about the sale and in coming up with the necessary documents for proof, as requested by the processing bank. Any time that you spend away from the main focus of your business is a potential loss that can never be recovered.

Chargebacks can cause many problems for a merchant. The expression "guilty unless proven otherwise" is probably the best way to put it. The credit card industry has made it easier for consumers to file chargebacks and transaction disputes, while the merchants are left with little industry support, if any.
As a merchant, the only route for you is the route that avoids these situations as much as possible, you will need to protect your site and your business from potential fraudsters and malicious buyers. Also, you need to provide the merchandise at its very best or as described, as well as the best kind of service, in order to avoid dissatisfied customers who will dispute their transactions.

Swipe thru versus internet

A typical retailer maintains a store and has customers physically walk in, present their charge card which is swiped through a terminal, authorized and a charge slip is printed which the customer signs. This type of merchant pays a rate lower than what an Internet/Mail Order merchant pays and is afforded a much greater degree of protection in the dispute process. The merchant can establish that the customer did in fact walk in, made a purchase, and signed the charge slip. Additionally, a smart merchant will ask for ID and record a drivers license number on the slip to establish that the person did actually come in and made a purchase. The merchant has an authorization number which doesn't in reality provide too much protection but at least establishes the fact that the card wasn't reported stolen or lost at that time.
With an Internet or Mail Order charge all a customer needs to say is: 'I do not remember ordering anything from this merchant'. This is a dispute that is filed when the customer receives their bill and sees the ('unknown'-) charge on the statement. This is called a "Retrieval Request".

Retrieval Requests

Whenever there is a chargeback, there will be an accompanying retrieval request. A retrieval request procedure is initiated when a cardholder or a credit card institution disputes or questions a transaction. They usually require a copy of the sales draft. As a merchant, you probably know that it is your responsibility to keep sales drafts, not only for tax purposes, but for cases of dispute as well. In the case of Visa, merchants are required to keep sales drafts for a minimum of 3 years. For MasterCard, they generally require storage for only 180 days.
These requests usually accompany information such as the cardholder's account number, the date of the transaction, the reference number and the sale amount. Retrieval requests are very crucial. When it is requested, you are expected to reply to it with the required documents within the specified time given.
You are usually given ten days to provide a valid and legible copy of the transaction receipt or any related documentation which can prove that the transaction indeed happened. This can be in a form of a sales invoice, rental contract, and so on. The document must contain the cardholder's name, the card number,transaction date, the total transaction amount, transaction or authorization number, the merchant name and location, and the cardholder's signature if available.
When it comes to retrieval requests, timing is very important. If you fail to respond, or if you respond late, the chargeback requested will be granted to the cardholder and chargeback fees will be imposed on you. Unfortunately, there is no acceptable excuse or recourse available for merchants, in cases of failure to respond to retrieval requests.

Proof?
Of course as an Internet Merchant you will most likely not have a signed charge slip. Your orders would typically be phoned in to you, emailed to you, transmitted through a secure credit card browser or faxed in. Emails are not considered signed charge slips even if you have a record of the email coming from an account belonging to the cardholder. This means you will overwhelmingly lose the vast majority if not all of these Retrieval Requests because you have no piece of paper bearing the charge with the signature of the cardholder.
Having a proof of delivery from the post office or UPS won't help. The cardholder only needs to say that a delivery was in fact made. Some goods that he or she never ordered were sent and the cardholder unknowingly signed for them and then threw them out having no knowledge of them and didn't want them wasting space. In the case of a delivery to a business address it is likely that a person other than the cardholder would sign for the goods and this of course defeats the signed receipt process for the merchant. If the cardholder claims they never ordered the goods there is no obligation whatsoever for the cardholder to retain the goods and/or return them.
The cardholder does not have to explain or provide any explanations as to how the merchant got their credit card information, and is under no compulsion to report the card stolen since it wasn't stolen.

Prosecuting and suing cardholders

This is a right you of course have. The problem is the law enforcement agencies will typically not work such cases, ask them if you don't believe it.
The cardholders are afforded certain rights under Federal laws. If you sue them it will be costly, especially since venue (where the correct jurisdiction is for the case) is ill defined in Internet transactions. Even if you do win you still need to collect.
Today the credit card holder is not the same as five years ago. The advent of secured credit cards and visa/mastercard debit cards have brought a whole different class of cardholder into the game. This is the person with bad credit who a few years ago could not get a credit card. Now they can get credit cards, practically anyone can get a secured credit card or a credit card/debit card. True with a debit card the dispute process is closed to the card holder UNLESS they say: 'hey I never ordered this' and then they get all the rights of a real credit card holder. It is also impossible for the merchant to tell a debit card from a real credit card unless you can look at the card.

Preventing Chargebacks

Chargebacks are the bane of merchants all around the world. Though chargeback cases can be won by an honest seller with presentation of the correct evidence, the time that it takes away from the core of your business and the hassle it creates makes the winning still not worth it. The only advisable way to deal with chargebacks is to avoid them at all costs.

Firstly, you have to be an honest seller. Honesty on your side means fewer problems, unless customers create them for you. Thus, you should make sure that you provide your items at their very best, and provide the best customer service that your company can muster. This way, your customers will not go to the extent of complaining about the transaction to their issuing bank.

Secondly, it is very important to prevent fraudulent transactions and unauthorized use of cards.

Here are some of the warning signs, which are red flags for possible fraud:
- Bulk orders which seem to be beyond normal range. Though these orders will increase your sales, be wary, as this can be a warning signal, especially if you are dealing with a new client.
- Orders for big ticket items. A new customer ordering a big ticket item should be subject to scrutiny first, before any transaction is granted.
- Multiple orders made within a short period of time. This may be a sign of unauthorized card use, so try to verify with the customer or the issuing bank.
- Different billing and delivery addresses. Though there are certain exceptions, it is advisable to verify this difference and check whether the card use is authorized.
- Orders which demand rush or overnight delivery. Orders, especially large ones, which request express delivery should be further investigated, again especially with new customers.
- Orders made with the use of free email addresses such as Yahoo or Hotmail.
Fraudsters rarely reveal their true identities and instead use free e-mail providers to place their orders.
- Orders made with various tries on the card number or expiry date. This means that the user is plainly guessing the expiry date, and the credit card is
not actually at hand.
- Multiple orders made using different credit cards, but delivered only to one address. For obvious reasons, do check whether the use of these multiple cards is authorized.
- International shipping where Address Verification Service is not applicable. International transactions are very risky, since it can be difficult to retrieve the goods once they have left the country. While not all transactions of this nature are fraudulent, it is safer to keep your guard up and exercise extra caution. It is best that you follow your instincts. If a transaction seems too good to be true, then it might probably be, at the end of the day.
- Use the security feature provided by both Visa and MasterCard, called CVV2 or CVCs, which matches security numbers found on the actual card.

To prevent instances of chargeback disputes, here are some useful suggestions:
1. Make sure that you provide your customers with all possible contact information and good customer service. This way, you will encourage them to channel their complaints to you first, before calling up their issuing bank to request a chargeback.
2. Be clear with your return policy, as well as your shipping policies, and make sure that your customer clearly understands them before transacting with you.
3. Aside from verifying the billing address and security code, request the name of the card issuing bank as one of your purchasing policies. Failure to provide this will be a big red warning flag.
4. Always send confirmation e-mails to your customer. These should be automated ones which contain the invoice. Once shipped, send another confirmation e-mail providing shipping details and tracking information.
5. When the shipping address is different from the billing address, try to confirm the information and exercise extra caution.
6. Many consumers ask for a chargeback when they do not recognize the charge being made on their credit card statement. Thus, make sure that your
company name and a clear transaction description will be reflected on their bill.
While these methods are ways for preventing fraudulent transactions and for winning chargebacks, they are not sometimes enough in the real world setting. This is because what causes most chargebacks is not fraud, identity theft, processing errors or the like. What causes most chargebacks is what is referred to as "friendly fraud."

What is Friendly Fraud?

From a merchant's point of view, there is nothing friendly or pleasing about friendly fraud. Friendly fraud is an industry term which refers to a fraud which results from a customer making a purchase with his or her own credit card, receiving the merchandise and then filing for a chargeback. This involves dishonest people who would like to keep the merchandise without actually paying for it.
In the offline world, this is known simply as shoplifting or stealing, and perpetrators rightfully belong in jail if caught red-handed. However, this pattern ofbehaviour is tolerated on the Internet, thanks to chargebacks. So, how can you prevent the occurrence of friendly fraud chargebacks and avoid customers who only want take advantage of you?
First of all, here are four elements that you need to incorporate into your transactions, to minimize occurrences of chargebacks:
1. Address Verification. You should decline transactions without a matching billing address.
2. Security Code. Your customers must provide the card security code found at the back of their card (aka the CVV).
3. Traceable Shipping Service. You should use only a shipping service with a tracking system in place, preferably one which requires a signature as receipt confirmation.
The first two are important to minimize fraudulent transactions not made by the owner, while the third is important to refute an invalid chargeback. A more detailed explanation of these will be found in another chapter in this explanation.
For the meantime, let us look into the ways by which you can win a friendly fraud chargeback.

Truth be told, friendly fraud is one of the most difficult type of chargebacks to process. The way you need to respond will depend on what kind of claim your customer is making. Here are some of the common claims made, and how you can respond to them:
1. Customer insists that the item was never delivered and that he or she never received the product they paid for. In response to the retrieval request, provide a copy of the transaction receipt, with matching AVS and card code, a copy of the delivery receipt from the courier, or any communication from the customer that indicates that they indeed received said product.
2. Customer says that the item is not as described, or is not happy with the purchase. This is one of the weakest excuses for coming up with a chargeback. You should provide the same documents as mentioned above, along with your refund policy and a statement which clearly states that refunds are possible, as long as the merchandise is returned.
3. Customer insists that the item has been returned, yet the refund was never issued. In this case, you should ask the customer for proof of delivery to your return address. If the customer happened to return the merchandise after the period covered by your return policy, provide a copy of the policy.
4. Customer says that the order was cancelled but the merchandise was still shipped. In this case, you will need to specify, in your selling terms and conditions, that once an order is placed, cancellation is not possible once the item has been shipped. You should provide the delivery receipt, record of secure code, a copy of your return policy and a statement welcoming return of the merchandise if refund is requested.
5. You have already issued a chargeback to the cardholder, yet the customer disputes the charges. This may be the most frustrating for merchants. These are made by those who obviously have ill intent. You can opt to report these cases to your local police.

Most Frequently Asked Questions about Chargebacks

Know that chargeback is a complicated matter, and also that each case is different from another. Here are some of the most frequently asked questions on chargebacks. For more questions and information about the intricacies of chargebacks.
What do I do with a Chargeback Notification?
A chargeback notification simply tells you that your account has been debited for a particular transaction. It should display information about why such an amount was debited from your account. You should read the notice carefully and then decide whether it is correct. If it is not, you should immediately send the notification to the financial institution, along with your supporting documentation.
If the issuing bank sees that your rebuttal is sufficient, the chargeback will be reserved and the amount will be credited back to your account.

What do I do with a retrieval request?
When you receive a retrieval request, immediately gather all of your supporting information related to the transaction being questioned, and then you can fax or send it to the credit card processor.

Why is the chargeback taken from my outstanding balance and not from my rollover reserve?
Remember that your reserve amount is set only for security purposes and to protect you, as merchant, from losses caused by chargebacks. A chargeback is usually taken out of your merchant account.

How will I know if the chargeback has already been deducted from my account?
You will usually be sent be a Notification of Chargeback as soon as the debit is sent by your bank. The debit of this amount from your merchant account will usually be the same day.

Why was there a chargeback issued to my buyer without a retrieval request being sent to me?
Note that not all chargebacks require that the cardholder bank send a retrieval request before a chargeback is initiated. Chargebacks that are obviously deserved by the cardholder will be automatically issued without consulting you, mainly because no consultation is needed.

Will I be charged for these chargebacks? How much?
When the credit card institution initiates a chargeback, expect it to immediately be charged to your account. Typically, you should allot anywhere from $30 to $50 for every chargeback filed. This fee will cover all of the processing expenses. Reversing a chargeback in your favour, on the other hand, will not cost anything.

How many chargebacks am I allowed a month?
When it comes to chargebacks, there is a certain limit provided by the bank, which varies from one bank to another. The chargeback ratio is the ratio between the number of chargebacks to the number of transactions you have. The maximum ratio that a merchant should have is probably 1% or less. If you happen to go beyond this limit, there is a good chance that your merchant account will be closed.

How long does this entire process take?
The duration of the chargeback process depends on the reason why the chargeback was filed. It can last anywhere from a month to about six months.

What will happen after a chargeback?
Once a chargeback is filed, the amount to be reimbursed will be taken from your account, plus the processing and penalty fees. If you provide enough documentation to show that the customer did not deserve the chargeback, then the amount taken from your account will be reimbursed.

What is the first thing I have to do when I receive a chargeback?
The best first step after receiving a chargeback is to contact your customer about their concerns. If both parties are amenable to coming to a mutually agreeable solution, then you would avoid going through the usual chargeback process.

Chargebacks and Third Party Billers (Such as AtwPay/AtwExchange)

Third party credit billing has gained popularity in the recent years. It has been most especially convenient for those who operate businesses without needing a merchant account. Services such as AtwPay / AtwExchange offer merchants the ability to accept credit cards for payment, without having to get an actual merchant account. These are great solutions especially for small businesses that are just starting out.
There are a good number of advantages you can get when you hire third party billers:
- The versatility. Third party accounts process a wide number of credit and debit cards from different banks and credit institutions. This means that they support about three times more clients than what will be possible with an individual merchant account.
- The savings. Unlike merchant accounts, third party processors generally do not require monthly fees. They do, however, charge a set up fee and
transaction fees.
- The instant statistics. Third party billers can provide instant statistical information on your transactions, which are updated in real time. These statistics are helpful, as they can help improve your business if used properly. Third party payment processors take charge of the whole purchasing process. This would usually include the shopping cart feature, credit card authorization and fraud protection, customer services and even billing inquiries. You simply have to integrate the third party biller's link into your site and the customers are taken to a safe and secure form, hosted by the third party service. Once an order is confirmed, you are notified, usually via e-mail. Your responsibility then will only be to ship the order to the specified mailing address.

What happens when buyers file a dispute? When problems with purchases occur and buyers file complaints, third party processors simply perform their
duty as the third party. In the case of AtwPay, we have a system in place wherein the buyer and the merchant can post messages
to each other to find ways to solve the problem.
When the dispute is not solved this way, a buyer may escalate the complaint against a seller. When this happens, AtwPay takes charge of determining whether the buyer duly deserves a refund or not.

How do third party processors help as far as chargebacks are concerned?

Some buyers do channel their complaints to their credit card company, which can lead to a chargeback. Upon filing the complaint, the credit card company notifies our merchant bank regarding the chargeback and debits the needed funds from them. After which, AtwPay
places the necessary funds related to the chargeback on temporary hold from the seller's account.
At this point, the third party processor immediately notifies the merchant and asks for documents and additional information, which they can use to dispute the chargeback. If the credit company decides that a chargeback is not deserved, the third party biller will immediately deposit back the debited funds into your account. This entire process can last anywhere from 75 to 100 days.

Myths to Dispel about Chargebacks and Third Party Processors

There have been many claims that third party merchant accounts do not have corresponding chargeback fees. Yes, there are quite a number of third party billers which, indeed, do not ask for chargeback fees. This allows merchants to save quite a lot on chargeback-related expenses. However, there are also third party processors that do not support both chargeback fees as well as refunds.
Instead, the merchant is expected to initiate the refund and give it directly to the customer.
Still, there are a number of third party processors that do not impose chargeback fees. However, if you look at their rates you will see that they have higher processing fees - high enough to actually cover chargeback costs. So, it is best that you look at their terms and conditions, know their rates and determine how their processes and offers work, before signing up.

As far as chargebacks are concerned, there is only one thing new worth mentioning in relation to international transactions. Chargeback fees for international transactions have augmented rates to cover the increased expenses for communication and correspondence.
For credit card companies, if no verification means are used, the only option to recover the fees will be to contact the local law enforcement. However, note that the lack of fraud measures worldwide has set many fraudsters running and going elsewhere for more. Moreover, once there are product disputes (whether or not the transaction was fraudulent), there might be very slim chances of re-covering the payment and fees involved in the transaction.
If you are a small business and you operate with slim profit margins, unless you are really sure about the authenticity of the transaction, it may be wise to avoid international transactions altogether. The risk may be way too much to tolerate.

Consider these tips to avoid potential Retrieval Requests and Chargebacks:

  1. Duplicate transactions
    Ensure that transactions/orders are only made once. Entering the same transaction more than once (by customers pressing the back button or clicking on the CheckOut button more than once), can result in "duplicate transaction" Chargebacks.
  2. Refund policy
    Your refund policy should be clearly visible on your website. Make it a requirement that customers read the policy before their order can be processed.
  3. Refund in a timely manner
    Failure to process credits in a timely manner can result in Chargebacks for "credit not issued." Also inform your customer on how long it will take before the refund will hit their account.
  4. Cancelling a rebilling
    If a customer requests cancellation of a recurring transaction which is billed periodically (monthly, quarterly, annually), always respond to the request and cancel the transaction immediately or as specified by the customer. As a customer service, advise the customer in writing that the service, subscription, or membership has been cancelled and state the effective date of the cancellation. Failure to respond to customer cancellation requests almost always leads to Chargebacks.
  5. Contact information
    Your contact details should be clearly visible on your website. Including a physical address and a telephone number, so not just an email address or contact form.
  6. Shipping policy
    Your shipping details should be clearly visible on your website. If your customer knows when they will receive their product they will not issue a Chargeback because they feel 'it has been too long' and they 'should have received the product by now'.
  7. Order status update
    Keep customers informed on the status of their order.
  8. Delay in shipping
    If the merchandise or service to be provided to the cardholder will be delayed, advise the cardholder in writing of the delay and the new expected delivery or service date.
  9. Out of stock
    If the merchandise ordered by the cardholder is out of stock and delivery will be delayed or this item is no longer available, advise the cardholder in writing and offer the cardholder the option of purchasing a similar item or canceling the transaction. Do not substitute another item unless the customer agrees to accept it. By giving the customer notice and the option to cancel, you may help avoid a customer dispute regarding the merchandise and a possible Chargeback.
  10. DBA on customers' statement
    Use a clear DBA (Doing Business As) name that customers will recognize. Vague corporate names that do not accurately describe what your company might do or sell will only confuse customers when they review their billing statements. An unrecognized DBA name on billing statements is one of the most common causes of Chargebacks. Inform your customers on your website what the billing name on their statement will be: "Please note: Our billing name on your statement will be: ..."
  11. Phone number on customers' statement
    Put your phone number on your customers' statements. If they do not recognize your DBA, they can call you to find out who you are and why you charged them.
  12. Responding to a Retrieval Request
    Always respond to a Retrieval request as quickly as possible. A limited amount of time is available to resolve a dispute. If you miss the window of opportunity to respond, you forfeit your ability to fight the Chargeback. If your processing bank has any more questions or requests, your quick response will ensure that they have enough time to get the relevant information from you.
  13. Customer satisfaction
    Some disputes are not the result of unauthorized credit card use. Rather, they start because the customer disputes the quality of the goods or services purchased. The best way to avoid this type of Chargeback is to work closely with the customer to establish a mutually satisfactory solution.
  14. Contact suspicious orders
    Call, fax or email any larlarge or suspicious orders to ensure the order is legit. If you are unable to reach the customer, you might have intentionally been given incorrect contact information. Issue a refund to prevent a Chargeback by the credit card holder.
  15. High-ticket sales/Fast delivery
    Be suspicious of high-ticket sales requested to be sent next-day air or if a runner will be in to pick up the purchase at a later time. Be wary of orders for which the customer is willing to pay more for faster delivery.
  16. Verify the customer's address
    It is possible to verify the customer's name, address and phone number with the card-issuing bank. By calling the Voice Authorization Center for address verification, you can verify the address and also provide proof that you verified the address.
  17. Always get signed proof of delivery
    Be able to provide a shipping tracer log that shows that the customer received the shipped goods.
  18.  Product information on website
    Provide accurate descriptions and images of your products on your website.
  19. Foreign orders
    Be very cautious of any foreign orders. Generally, orders from Asia, the Middle East, and most parts of Africa are considered high-risk.
  20. Different billing and shipping address
    Be wary of orders with domestic billing addresses and foreign shipping addresses. They are usually fraudulent.To ensure the order is legit. If you are unable to reach the customer, you might have intentionally been given incorrect contact information. Issue a refund to prevent a Chargeback by the credit card holder.


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