Chargeback Prevention Tips to Prevent Credit Card Fraud at Your Business!
It is hard for customers who sign a receipt to win their chargeback. The merchant has the advantage because the signature proves to the card processor that the customer did purchase the product or service. Most credit card disputes or chargebacks are card-not-present transactions.
When you receive a chargeback, it is of utmost importance that you respond quickly to the notification. There is only a week to 10 days to respond, otherwise the credit card issuer assumes the chargeback is legitimate. By the way, the money for the chargeback is immediately withdrawn from the merchant’s bank account until the merchant proves the charge was legitimate.
So here are some suggestions to help prevent losses to credit card transactions being charged back. And remember, customers have six months to issue a chargeback from their credit card.
1: Clearly display your policies for product returns or cancellations of services. If the policy is lengthy to read with small print, consider highlighting essential points or summarizing the basics so the policy is easy to understand. This practice will make it easier for customers to know and understand the procedures if they are unhappy. Display the return procedure on your website and your customer support phone number. Include return policies and conditions with shipped orders. If the policies are not easy to find or you do not have an easy-to-find customer service support line for people to call and discuss an issue, then people opt for the convenience of, “I’ll just charge back the item.”
- Make sure you refund your customers promptly. Otherwise, people naturally get impatient and choose a faster option of charging back their credit card.
- Don’t charge a customer’s credit card until the item has been shipped or until the service has been performed. Be sure to notify your customers if there is a delay in production or shipping. Communication is of utmost importance to customer satisfaction.
- Speaking of communication, keep in touch with a client during a return attempt process. Steps you take to resolve an issue go a long way toward keeping customers happy and preventing chargebacks.
- If you are shipping an item, get a signed receipt from the person who accepts the delivery. If a customer downloads a product, keep a timestamp of the digital download. Many chargebacks claim they never received the product, and a delivery receipt or time stop provides proof.
- Take extra steps to ensure an order comes from a legitimate customer and not a fraudster. Verify that the address on the credit card matches the shipping destination address. If not, call the customer to verify they have a legitimate reason for the mismatch before you ship. Perhaps they moved. Fraudsters have a card number and generally don’t have the address on the card. Be wary if someone is shipping to a storage unit or a different address than their home.
- consider talking to the customer before shipping if you sell high-value items. Do they ask questions about the product’s design or functionality and show a legitimate interest in the particulars of the purchase? Fraudsters don’t need details about the products they are trying to steal.
- Beware of substantially large-priced orders from a customer you have never worked with before.
- Beware of a customer who wants to pay you more for the product than it is worth and send you a check for the difference. This is a scam.
- Do not let customers split a large ticket between two or more credit cards. This could also be a scam. You cannot win a chargeback from a split ticket.
- Be very careful shipping to customers outside of the U.S. Other countries have different laws and are not subject to the Visa and MasterCard regulations in the United States. It is almost impossible to win a chargeback from an international credit card.
- Here is a suggestion for purchases over the phone. You can always email a contract or invoice requiring a signature to a customer and demand a scan back with their signature on the document.
- If you take deposits online and then take the balance due on delivery, make sure that the person signing for the balance due is the same person who paid the deposit and signed the contract online for the purchase. Otherwise, the entire transaction can be charged back, and you will lose the money and the product.
I hope this has been educational. Be careful. Just because it looks and quacks like a duck does not mean it is a duck. Just because credit card transactions appear in your bank account like cash, does not mean they are cash. You are issuing credit and credit can be charged back.
If your credit card processor does not help guide you through winning a chargeback, consider trying Electronic Money Company for your merchant services. Contact us today!
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