Avoiding merchant chargebacks

PBN Staff

11/07/2009

Dear Dan: I’ve been burned so many times by credit card chargebacks that I’m feeling like a real chump. What can I do to prevent this from happening? – Chargeback Chump

Dear Chargeback Chump: Merchant account chargebacks are a dreaded event for any business that accepts credit or debit cards. They are expensive, time consuming, subject to fraud and just downright annoying.
Here are 10 things you can do:
&#8226 Identify yourself clearly. Make absolutely sure that a company or product name the buyer will recognize appears as the “descriptor” on the customer’s credit card statement. Customers will dispute charges from entities they don’t recognize.
&#8226 Seek feedback. Encourage customers to contact you first with any question or dispute. That means making it easy for them to find your phone number, e-mail address, Web site or other contact information.
&#8226 Verify by e-mail. For online or phone orders, always send a confirming e-mail to the customer to verify. If the e-mail bounces, or the customer won’t provide an e-mail address, that’s a red flag.
&#8226 Be nimble, be quick. Whatever you do, do it fast. Send notices immediately, ship goods on time, perform authorizations and process credit cards on the spot and respond to any and all disputes posthaste.
&#8226 Follow procedures. If a credit card is expired, an address doesn’t match or authorization is declined, don’t complete the sale. Make sure information on receipts is accurate and legible.
&#8226 Safeguard against duplicates. Be sure transactions are entered only once – a duplicate could trigger a chargeback. Ask your merchant-account provider to enable duplicate-checking safeguards on your account.
&#8226 Display your return policies. Make your return, exchange and cancellation policies clear on your Web site, in your store, on receipts, in confirmation e-mails – and anywhere else you can think of. This discourages chargebacks.
&#8226 Request signatures. One crooked-customer tactic is to claim goods were never received. To discourage this, consider using signature-required delivery services.
&#8226 Challenge the chargeback. You don’t have to take chargebacks lying down. You can still salvage the sale by providing detailed information to your merchant bank documenting the transaction and all actions taken to resolve any dispute.
&#8226 Get bad. If chargeback woes have you at wit’s end, consider the “BadCustomer” approach. Check the BadCustomer.com database for potential chargeback risks, and warn customers you’ll report them to the site for unwarranted disputes. &#8226