If you’re wondering how to stop chargebacks, you’re not alone. The most common cause of chargebacks is fraud. Clerical errors, friendly fraud, and unauthorized credit card use are all common problems. Here are a few strategies to help you stop chargebacks and keep your customers happy. Read on to learn more. After reading this article, you’ll have the skills to handle chargebacks and reduce the number of them.
The Leading Cause
Although chargebacks can be a useful security measure, they can be a major headache for small businesses. Besides the loss of profits from consumers who keep their merchandise, chargebacks can also cost merchants more than the profits on disputed orders. So, how can you prevent them? By following these tips, you can improve the quality of your business operations. Here are some of the most common causes of chargebacks.
A friendly fraud dispute is expected because of a lack of a clear refund policy. This dispute is often unintentional, but a good customer service rep can combat this. Even though nearly half of chargeback disputes are friendly, a well-trained and robust customer support team can help reduce the likelihood of a conflict. Good customer support can reduce unnecessary chargebacks by offering additional help to priority users while keeping your chargeback ratio manageable.
Clerical Errors
Clerical errors are the leading cause of chargebacks. Up to 35% of chargebacks result from backend errors, including inaccurate inventory counts, duplicate charges, and sending the wrong items. Improper recordkeeping is another common cause, but keeping records up-to-date and amending order issues quickly can minimize chargeback risk. Here are some tips to reduce chargebacks:
Clerical error chargebacks can be caused by duplicate billing, accidental double billing, or errors in calculating an order. In some instances, a chargeback may be initiated by an evil consumer who a product has not harmed. On the other hand, fraudulent chargebacks result from fraudulent transactions, such as identity theft. Regardless of the cause, learning as much as possible about chargebacks or seeking and learning about merchant chargeback protection before they happen is essential.
Unauthorized Use of a Credit Card
How to stop chargebacks from unauthorized uses of a credit card? There are different rules and protocols for each credit card processor, but you can do a few things to improve your chances of winning chargebacks. Fraudulent credit card use is typically the result of compromised payment information. The issuer may catch the fraudulent purchase, close the account, and issue a new card. For example, a recent case of theft at Target and Home Depot involved thousands of fraudulent purchases.
Credit card chargebacks are disputes that occur when a customer disputes a transaction. The merchant will reverse the transaction and pay the customer a fee for the disputed transaction. The chargeback process began with the Fair Credit Billing Act of 1974, which set guidelines for consumers to protect them from fraud and unfair billing practices. Individual credit card companies have also put timelines and procedures for investigating chargebacks.
Free Return Shipping
You may be wondering how to stop chargebacks with free return shipping. Over 80 percent of consumers expect free return shipping from retailers. Free return shipping means that the customer gets to keep the merchandise. The best way to avoid chargebacks is to be as courteous as possible to your customers. Always process refund requests in writing or by phone, and apply the same policies for physical and digital goods. Here are three tips:
List frequently asked questions about return policies. Customers often have questions about your return policies, and listing FAQs will ensure they receive the answers they need and do not have to wait in line at the post office. Even if a return doesn’t follow your company’s return policy, it will reduce the chance of a chargeback by encouraging others to purchase your product. In addition, many consumers trust reviews online more than other sources, so cross-reference your FAQs to ensure that your customers are satisfied.
Communication
The last line of defense for chargebacks is the merchant. This is often the most challenging area to tackle as the merchant may not understand their processes and aren’t aware of potential trouble spots. Even companies with more experience may not thoroughly explore the problem areas. This is because familiarity breeds complacency and saves time. The last thing the merchant wants is to face a high rate of chargebacks. Fortunately, there are ways to mitigate the number of chargebacks and improve the relationship between the consumer and merchant.
One of the most common ways to reduce chargebacks is communicating with the consumer. Consumers should try to resolve any issue with the merchant before requesting a chargeback. This is especially important for eCommerce merchants. A merchant should respond proactively to chargeback requests by ensuring the customer receives an email receipt within two business days. It’s also good to set up post-mortems to understand why chargebacks happen and identify friction points.
Challenge Invalid Disputes
To stop chargebacks, merchants need to learn how to challenge invalid disputes. If an argument is made on a chargeback that is not valid, the customer may have to pay a fee or be charged a Technical Violation fee. To win this case, merchants must submit all relevant documentation from the chargeback lifecycle. Typically, the more relevant the documentation, the more likely they will succeed.
By analyzing chargeback data, you can identify recurring patterns. You can also look for ways in chargeback intentions, even though reason codes don’t always accurately depict where the chargeback originated. With time, you will build up a substantial body of data and can use that to determine which chargebacks are the most problematic. This way, you can focus your efforts on preventing valid disputes. While accurate chargebacks can be challenging to stop, they can still be easily prevented.