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Here’s How to Avoid Chargebacks and What To Do If You Caught One

Chargebacks are integrated into the banking system to protect customers from fraud, but they can cause problems to honest merchants too.

Cardholders don’t always know the full description of a chargeback. Usually, they remember that it’s a form of refund that lets them get the money back quickly without returning the purchased item.

Online store owners, who use merchant chargeback protection services, rarely face the problem, but they all came through it before the solution arrived. Below is a to-do guide that will help you protect yourself in the future.

Chargeback Prevention Measures

The first thing you need to do is to reduce the probability of chargeback. Here are the essential steps that your online store has to undertake for this:

Follow Payment Processing Protocols – you should apply the card-not-present protocols of your card-processing network and collect all the required information from users (IPs, CVVs, AVS, and so on) to be able to identify fraudulent transactions and reject them timely to avoid unwanted chargeback disputes.

Use Clearly Identifiable Payment Descriptors – this step is highly important to prevent the common “friendly” fraud when a customer cannot recognize a transaction on the credit card statement and reports it as a fraudulent or suspicious charge. The description must include the storefront name, company name, customer service phone number, and the full name of the purchase.

Provide Top-Notch Customer Service – it should be easy to reach your customer service and get a direct refund. It will cost you a lot less than a chargeback that ruins your bank rank. Customers rarely opt for chargebacks if they see how friendly and generous the merchant is.

Verify Suspicious Orders – if you notice any suspicious orders, such as too large orders of the same item, multiple failed order attempts from the same IP, or any other activity that doesn’t look normal, try to contact the customer to figure out if everything is alright and to confirm their intentions. It’s also advisable that you verify their card info and actual address.

Keep Clear Records – all the data about purchases must be stored on multiple protected carriers. This will help you prove your argument if it comes to a chargeback debate.

Make Refund Policies Transparent – always offer your customers to get acquainted with your refund and exchange policies before they make a purchase. Make sure to deliver information in the simplest format possible to prevent confusion and reduce the probability of chargeback requests.

Meet Customer Expectations – your products and services shouldn’t be overhyped as it may lead to frustration, immediate loss of trust, and, in most cases, a chargeback.

What If a Chargeback Occurs?

As a chargeback cast cost you up to 250 and so on of the initial item/service cost, you should know the steps to fight the money back. This usually takes 1-3 months and requires you to:

  1. Make sure that the transaction was legitimate and you have evidence against chargeback (including the fact of a refund);
  2. Make sure that the dispute cost is worth returning the loss;
  3. Submit the request and include all the evidence you can gather. The bank must provide the list of the needed evidence;
  4. If you receive a pre-arbitration, provide additional evidence or accept it if there’s none. Insisting without evidence is bad for your rating.

Precautions Taken

Ensuring that you have implemented all the necessary precaution measures and applying for the best chargeback protection service will minimize the risk of unexpected losses.

Of course, it’s nearly impossible to stop customers and online thieves from attempting chargeback, but reducing it to the minimum is in your hands.

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