Fraud is the Most Common Cause of Chargebacks

Chargebacks can cost your business a lot, both in terms of money and reputation. Aside from the loss of revenue, you risk fines, penalties, blacklisting, or even a frozen account. Visa recognised this and made necessary changes. Their 2018 chargeback update goes a long way in protecting businesses from erroneously filed chargebacks.

Visa reduced the number of complaint categories to 4, and simplified specific reasons to 24, which each fall into one of the 4 larger categories. Visa also shortened the period for merchants to respond to chargeback queries. There are other things your business can do to lower the burden of chargebacks on your business. Let’s look at some of the most common causes of chargeback requests, and how to resolve them.

Credit card theft

This is the main basis for chargebacks, and concern over this precise situation was what originally led to the creation of the chargeback rule. The rule was first issued in 1974 under the Fair Credit Billing Act. As a business owner, you generally can’t prevent criminals from physically stealing credit cards, but you can try to prevent interception by making sure to follow the security protocols provided my your merchant account provider.

Unsatisfied customers

Customers can be unhappy for any number of reasons. The item purchased by the customer may have been delayed in the mail or may have been damaged, or the customer might simply not want it anymore because they changed their mind. Maybe the sales clerk was rude to them, and they just want revenge. Or maybe your website took too long to load and they got impatient and navigated away, but their card had already been billed.

To resolve this last concern, use a payment processor with instant verification. This eliminates lag time for the customer. Also, stay in touch with your customer after purchase. Send them an email receipt that has the details of what they bought. Include tracking numbers and someone they can contact in case of problems. Make them feel that you care.

Customer error

The customer may have forgotten the due date for delivery, or the purchase may have slipped their mind altogether. Or the customer might get confused about their billing entity. Clear receipts can help with this. Make sure you use a credit card merchant account provider that will allow your company’s name to appear on your customers’ monthly statements so that they will recognize the charge.  This helps to prevent chargebacks based on an unfamiliar business name in their card statement. Also, post a clear refund policy (even if that policy is “no refunds”). Make it easier to reach you than the bank, so customers who follow the path of least resistance will resolve things directly.

For more information on keeping your business safe from credit card chargebacks, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.