• Latest
Merchant Guide to Understanding Chargebacks

Merchant Guide to Understanding Chargebacks

February 4, 2021
Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

March 28, 2023
How to Strengthen Your Small Business’s Defenses Against Identity Theft

How to Strengthen Your Small Business’s Defenses Against Identity Theft

March 23, 2023
How Companies Can Avoid Zero-Party Data Fraud

How Companies Can Avoid Zero-Party Data Fraud

March 13, 2023
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: How to Stop Return Policy Abuse Fraud (Pt. 2)

February 22, 2023
Germany’s Fraud Prevention Firm Hawk AI to Focus on Global Expansion with $17M Series B

Germany’s Fraud Prevention Firm Hawk AI to Focus on Global Expansion with $17M Series B

February 15, 2023
Merchant Fraud Journal Releases Biggest Annual Fraud Trends Report Yet with Insights from 16 Leading Payment and Fraud Solutions

Merchant Fraud Journal Releases Biggest Annual Fraud Trends Report Yet with Insights from 16 Leading Payment and Fraud Solutions

February 7, 2023
Curbing emerging fraud types with network intelligence and data enrichment

Curbing emerging fraud types with network intelligence and data enrichment

January 31, 2023
Policy Abuse Fraud: What Is It and How to Protect Against It

nSure.ai Delivers Growth to Digital Commerce Leaders and Boosts YoY Revenue by 280%

January 25, 2023
Fraugster and Refurbed partner to increase approval rates and reduce fraud for refurbished electronics marketplace

Sift Appoints Former Ping Identity COO Kris Nagel as CEO

January 20, 2023
Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

January 19, 2023
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: How to Stop Return Policy Abuse Fraud

January 10, 2023
How to Write a Strong Chargeback Policy: Tips to Help You Protect Your Business

How to Write a Strong Chargeback Policy: Tips to Help You Protect Your Business

January 6, 2023
  • Contribute
  • Contact Us
  • About
  • Join Us
  • Advertise
Wednesday, March 29, 2023
Merchant Fraud Journal
  • Home
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Resources
    • Recorded Webinars
    • Podcasts
    • Vendor Directory
    • eCommerce Fraud Reports
    • Training and Certifications
    • Jobs Board
    • Associations and Non-Profits
  • News
No Result
View All Result
  • Home
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Resources
    • Recorded Webinars
    • Podcasts
    • Vendor Directory
    • eCommerce Fraud Reports
    • Training and Certifications
    • Jobs Board
    • Associations and Non-Profits
  • News
No Result
View All Result
Merchant Fraud Journal
No Result
View All Result

Merchant Guide to Understanding Chargebacks

by Bradley
February 4, 2021
in Articles, Chargebacks
Merchant Guide to Understanding Chargebacks

Editorial note: This guest post was submitted by Cris Carillo, co-founder of Allied Payments

If you’ve been in business for any length of time, you have probably experienced something similar to this:

A consumer finds your online shop and purchases something from you. They pay for the item, you ship it to them and life goes on. However, several weeks or even months down the road, you see that the money was removed from your bank account and given back to the consumer without your knowledge.

The consumer went to their bank and requested a chargeback without ever speaking to you!

What is a Chargeback?

The example above is a classic scenario in a chargeback situation, but should not be.

Chargebacks were designed to protect consumers from fraudulent behaviors. If the card is lost or stolen, consumers know they can simply contest the charges made on the card while it was out of their possession and the bank will give them their money back. This is also the case if a merchant is doing something fraudulent.

Chargebacks were NOT designed for consumers to go behind the merchant’s back and ask for their money to be returned. In this situation, the consumer is essentially stealing from the merchant because they can purchase the item, receive the item and then ask the bank to give them their money back. This can be viewed as a type of theft.

How do Chargebacks Work?

Chargebacks go through several steps before being finalized. Understanding the process can be helpful for a merchant because you can then try to mitigate the risk as much as possible. However, sometimes the merchant is completely unaware that they are in a chargeback situation, which can be frustrating.

Step One: The Cardholder Files a Chargeback

If a cardholder typically calls their back to begin the chargeback process. They file a chargeback with their bank and ask for the funds to be returned to them.

Step Two: The Bank Investigates

The bank will assign a specific code to the chargeback, which represents the reason for the filing. This can be a number of different reasons. Each code has a different set of guidelines including filing time, documentation, etc.

The bank will then investigate the chargeback to determine whether or not the complaint is valid. This investigation will include a review of policies and regulations and whether or not they were followed by both parties – the merchant and the cardholder.

Step Three: Funds Are Returned to the Cardholder

If the investigation finds that the purchases were fraudulent or the merchant gave poor customer service and/or products, the bank has the right to take the money from the merchant’s account and give it back to the cardholder. This is where things get tricky.

As mentioned earlier, chargebacks were designed to protect consumers from fraud and encourage the use of credit cards. However, some cardholders have begun to abuse the system by filing chargebacks for lots of things that are not appropriate. These things can include buyer’s remorse, forgetting that you made a purchase or even to avoid a restocking fee.

Step Four: Merchant Takes Action if Necessary

As a merchant, you must accept the loss if the chargeback is found to be fraudulent. But, it is possible for a merchant to dispute a chargeback if they can provide the necessary documentation. In order to file a dispute and get your money back, you may need to prove some of the following pieces of information, depending on the situation.

  • Merchandise was actually delivered to the cardholder
  • Cardholder picked up the merchandise in your store (you can prove this by accepting photo IDs for in-store pickups
  • The consumer is actually using the merchandise
  • Signed or recorded acknowledgement of the order for phone or online transactions
  • Proof of previously undisputed recurring charges or purchases of similar products or services

If the merchant is able to prove some or all of these things, it is likely that the chargeback will be deemed invalid and the money returned to the merchant’s bank account.

How long does a chargeback take?

Typically, the whole process can be anywhere from one month to three months. This timeframe is dependent upon how quickly the documentation is provided to the bank and how questionable the situation is. In many cases, there is extensive research that has to be done in order for the bank to make the right decision.

Tips to Preventing Chargebacks

As a merchant, one of the best things you can do to avoid chargebacks is to provide exceptional customer service. Although there will always be the small percentage of people who are trying to cheat the system, most of your consumers likely do business with you because they like your product or service. Providing an amazing customer experience can help decrease your risk of chargebacks.

Here are some tips on how to do that:

  • Process orders in a timely manner
  • Have your systems configured so consumers get detailed, itemized receipts for their purchases
  • Make sure that all terms and conditions are clear and easy to understand
  • Respond promptly to email, phone calls and social media messages
    • This one is HUGE! Many consumers reach out through online platforms because it’s easier than making a phone call. Merchants who respond promptly and appropriately in these platforms will have a better chance of avoiding chargebacks when the product or service isn’t perfect
  • Keep track of EVERYTHING! Receipts, phone calls, emails, etc. Have your systems automated so that this is an easy process for you.

Chargebacks can be a really scary thing for merchants, particularly if you’re using the services of a high-risk merchant account because of prior issues. They can threaten the livelihood of your business and cause some major headaches. They can also eat up a ton of your time if you have to spend it defending the charges on someone’s credit card.

There are ways to mitigate the risk of chargebacks and we recommend you try all of them until you find what works for you. Systems and processes are the best way to protect your business, even though they can be time-consuming to setup. If you’re ever presented with a chargeback situation, you’ll be thankful that you have all the proof you need to dispute it if necessary.

Tags: allied payments
ShareTweetShareSend
Previous Post

What Is Card Not Present Fraud

Next Post

New Podcast Episode: An Ex-Fraudster Tells You How He Committed Card Not Present Fraud

Next Post
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast Episode: An Ex-Fraudster Tells You How He Committed Card Not Present Fraud

Our Latest Reports

2022 Chargeback Consumer Survey Report

Fraud Prevention Tactics that Enable Exceptional Customer Experience

Addressing Payment Fraud and The Customer Experience in 2022

2022 Fraud Trends Report

ATO Fraud In Retail Report

2022 Customer Experience Report

3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue

Digital Trust And Safety Report: Combating the Evolving Complexities of Payment Fraud

On-Demand Webinars

Balancing Customer Experience and Fraud Prevention: What’s the Secret?

Stopping Fraud Across the Customer Lifecycle

Addressing Payment Fraud and the Customer Experience in 2022

 

Get the 2023 Fraud Trends Report

Search Our Site

No Result
View All Result

Our Sponsors

Featured Directory Listings

  • logo
    NoFraud
  • SEON. Fraud Fighters
  • sift logo
    Sift
  • Signifyd
  • Ekata
  • Microsoft Dynamics 365 Fraud Protection
  • PayRetailers
  • Spotrisk

Our Sponsors

Fraud Industry News

Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

March 28, 2023
How to Strengthen Your Small Business’s Defenses Against Identity Theft

How to Strengthen Your Small Business’s Defenses Against Identity Theft

March 23, 2023
How Companies Can Avoid Zero-Party Data Fraud

How Companies Can Avoid Zero-Party Data Fraud

March 13, 2023

Connect With Us

Quick Navigation

  • Home
  • News
  • Join Us
  • About Us
  • Contact Us
  • Advertise
  • Contribute
  • Privacy Policy

The Payments Media Network

Merchant Fraud Journal
Payments Review

Privacy Policy

Our Privacy Policy
Our Terms of Use

Resources

  • Articles
  • eCommerce Fraud Reports
  • eCommerce Fraud Webinars
  • Training and Certifications
  • Jobs Board
  • Associations and Non-Profits
  • Podcasts
  • Vendor Directory

Popular Posts

  • How to File a Claim With FedEx + What To Do If Claim is Denied

    How to File a Claim With FedEx + What To Do If Claim is Denied

    0 shares
    Share 0 Tweet 0
  • How Does Two-Factor Authentication (2FA) Work?

    0 shares
    Share 0 Tweet 0
  • Top eCommerce Fraud Prevention Companies

    0 shares
    Share 0 Tweet 0
  • The Best Reverse Email Lookup Tools in 2022 (with pricing)

    0 shares
    Share 0 Tweet 0

Featured Vendors

  • NoFraud
  • SEON. Fraud Fighters
  • Sift
  • Signifyd
  • Ekata
  • Microsoft Dynamics 365 Fraud Protection
  • PayRetailers
  • Spotrisk

Download the 2023 Fraud Trends Report

No Result
View All Result
  • About Merchant Fraud Journal
    • Interested in Contributing or Guest Posting to Merchant Fraud Journal?
  • Advertise on Merchant Fraud Journal
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Contact Us
  • Download Addressing Payment Fraud and Customer Experience Report
  • Download Chargebacks Consumer Survey Report 2022
  • Download Evolving Complexities of Payment Fraud Report
  • Download Fraud Prevention Tactics that Enable Exceptional Customer Experiences Report
  • Download Merchant Fraud Journal 2023 Fraud Trends Report
  • Download the 2020 Chargeback and Representment Report
  • Download the 2020 Merchant Fraud Journal Vendor Guide
  • Download the 2021 Fraud Trends Report
  • Download the 2022 Fraud Trends Report
  • Download the 3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue Report
  • Download the MFJ 2022 Customer Experience Report
  • Download the MFJ ATO in Retail Report
  • Home
  • Job Dashboard
  • Join The Merchant Fraud Journal Community
  • Merchant Fraud Journal Advertising Agreement
  • MFJ Fraud Trends Report Giveaway
  • News
  • Post a Job
  • Privacy Policy
  • Resources
    • 2020 Chargeback Representment Guide for Merchants
    • 2020 Vendor Guide
    • 3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue
    • Addressing Payment Fraud and the Customer Experience in 2022
    • Associations and Non-Profits
    • ATO Fraud In Retail Report
    • Balancing Customer Experience and Fraud Prevention: What’s the Secret?
    • Chargebacks Consumer Survey Report 2022
    • Digital Trust & Safety: Combating the Evolving Complexities of Payment Fraud
    • eCommerce Fraud Reports
    • eCommerce Fraud Webinars
    • Fraud Prevention Tactics that Enable Exceptional Customer Experiences
    • Fraud Prevention Training and Certifications
    • How to Build a Recession Proof Chargeback Prevention Strategy
    • How to Stop Fraud During the 2022 Holiday Season
    • Jobs Board
    • Merchant Fraud Journal 2023 Fraud Trends Report
    • Merchant Fraud Journal’s Fraud Trends 2020 Report
    • Merchant Fraud Journal’s Fraud Trends 2021 Report
    • Merchant Fraud Journal’s Fraud Trends 2022 Report
    • MFJ’s 2022 Customer Experience Report
    • Podcasts
    • Prevent High-Velocity Fraud Attacks During the 2021 Holiday Season
    • Stopping Fraud Across the Customer Lifecycle
    • Vendor Directory
    • Webinar – Addressing Payment Fraud and the Customer Experience in 2022
    • Webinar – Mitigating Fraud and Risk on the ACH Network
    • Win January Chargeback Disputes
  • Subscribed
  • Terms and Conditions

© 2021 Payments Media Solutions Canada Inc.

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?