word may make their blood pressure rise in response. While all merchants would like to have no chargebacks, the reality is at one time or another they will be faced with one. Simply put, chargebacks are the reversal of the transactions dollar value. Chargebacks can be costly in the amount of energy spent disputing them to the fees incurred on their merchant account. Understanding that chargebacks are just a part of “doing business” and arming yourself with the appropriate tools and knowledge can help you to lower their occurrences. Being adequately prepared for copy requests and chargebacks can greatly increase dispute judgments in your favor. Prevention and preparedness is the key.
Prevention is a merchant’s first line of defense against chargebacks. Typically, online merchants see higher rates of chargebacks than brick and mortar business and will have additional preventive steps. Regardless of what type of business you are in common reasons for chargebacks can be lumped into four categories:
Non-fulfillment of copy requests, customer related, errors in processing, and fraudulent activity. Taking a closer look at these four categories and the common reasons for chargebacks we can begin to take the appropriate precautions at the point-of-sale.
Non-fulfillment of Copy Requests:
Customers or issuing banks may request a copy of the sales record. Know the proper procedure for copy requests. It is imperative that the merchant responds within 12 days that the request was received. Failing to provide adequate documentation for copy requests could result in a chargeback. Keeping and maintaining sales records on file is a necessary step in preventing chargebacks. Prepare a system for organizing sales and credit records and store them in a uniform manner.
Customer Related Chargebacks:
1. Recognizable DBA
Reduce customer related chargebacks by having an easily recognized DBA (Doing Business As) on the customers billing statement. The DBA should match your business name or web address, if at all possible, to avoid possible customer confusion. If a recognizable DBA is not possible, provide the customer notification on a store sign, receipt, check-out page, or on the catalog order page that states, “Please note that this charge will appear as _____on your billing statement”.
2. Provide Contact Information
Providing contact information such as a telephone number on the customer billing statement will give customers merchant tools the ability to contact you with questions or concerns. Having contact information readily available to customers will eliminate unsatisfied customer chargebacks, giving the merchant an opportunity to rectify the situation.
3. State Store Policies
Ensure your store policies regarding returns, exchanges, credits, and damaged items are visible and easy to read. These policies should be available at the time of the transaction. Provide an easy to read sign at the cash register or a visible banner on your websites checkout page. Provide a printed “policy section” on customer receipts and shipping receipts. Always follow the same protocol for returns, exchanges, etc. Varying your response to these situations can confuse customers of your policies and spark disputes. Credit receipts should be deposited with your acquirer quickly. Failing to deposit these credit receipts could cause a “credit not issued”, resulting in a chargeback. Keep records of credit receipts. These receipts should include the date the credit was given and the total amount of the deposit, including the credit.
4. Communicating with Customers
Communication is the easiest and most cost effective means of avoiding chargebacks. Communicate with customers regarding their order from processing to delivery. Respond to customer inquires promptly. Utilize signed delivery receipts from carriers like USPSâ and FedExâ showing name and address to which the merchandise was delivered. Refrain from depositing a transaction until the merchandise has been shipped. If there will be a delay in shipping because an item is out of stock or the item is no longer available, notify your customer in writing and offer them a substitution or cancel the transaction.