I recently got a notice of a chargeback, and this would be the 4th one (2nd for reason below), and it's frustrating of course, but I just don't know how to fight these anymore.

I started offering a selection of import DVD movies (region 2,4,5,6), US is region 1, and most DVD players in the states will not play these import DVDs. Because of that, the imports have their own section, with several warnings that these are different region dvds and you must be sure you have a dvd player that can play these region. It is all very very clear and you can't miss the warning. I make it as clear as possible because I don't want any problems.

There is a large market for import dvds in the states before anyone asks why I would even sell DVDs that wont play on most players here.

So, emails from the customers that lead up to the chargeback. They are very upset that their new dvd won't work, so I check on their order and its an import. I point them to the warnings and said you will need a dvd player that supports that region. They say your ad isn't clear (it can't be any clearer). They demand their money back, and I refer them to our return policy (which must be agreed to in order to check out). To me, it seems as if they did not read the description, or figured the warning didn't apply to them somehow.

I took the advice from a previous thread after a couple more emails, and offered to accept the dvd back. They were opened so I said I would need to charge a 15% restocking fee. That is the last I heard from one person, the other person said no, it wasnt my fault the disks didn't work. I tried to explain that one, but in the end, it resulted in a chargeback.

So 2 chargebacks for item defective/not as described, because the customer didn't read/listen to the warning about regions. How am I going to fight this? I gave all the info I could on my previous 2 chargebacks, but I don't think those ended in my favor somehow.

Is there something I can just do for the future, like a checkbox required to checkout that says I have read and understood the description? So I can just tell the merchant account, they agreed they read the warning, here is the proof.

But item defective / not as described is so broad, I could give them all the information in the world, and they could come back and say the disk was cracked or something.

I just need some help on how to stop these (wrongful) chargebacks before I go crazy! I guess I picked the wrong field to start an ebusiness, huh?

Thanks again

oh and if I am unable to respond to a chargeback in the given time, is that much worse then getting the chargeback in the eyes of the merchant account?

First of all you must talk to your merchant account provider and ask them what safeguards they would like to see in place - this may help them making a decision whether to issue a chrageback or not.

I think putting some sort of conformation system (as you suggest a tickbox) is a good idea.

Why not send out an email, when an order is rec'd, saying "Because of a huge number of recent chargebacks, we are now requiring that you reply to this email acknowledging that you ordered an import, which may not work in all machines."

Don't process the order until they reply to the email.

--Tina

AH-Tina's email suggestion sounds best.

The only other solution... as they go through the order process... they click through to confirm order, and it says:

Before allowing you to confirm this order, we have had a huge number of chargebacks bla de bla because of bla de bla reason.

Put it in a box in the middle of the page on a different background colour.

Make the title in the box Warning.

And then make the sentence about imports not working in the states on all DVD players in bold.

Finally have a button... by clicking accept you agree that your DVDs are imports and thus will only play on DVD players that support the DVDs region code.

Or something along those lines.

That way no email required but you've made it even clearer?

But Tina has the better solution as it's like a double confirmation.

Maybe stick a warning in the box you send them in too - that way they at least won't open it without being aware of that. :)

thanks for the replies.

I would think the check box that is required to be checked that says something along the lines of I understand and agree with all information in the description or a region warning, would accomplish the same thing as the email thing. My email system gets quite a bit of return emails from peoples spam filters and all, so I'm not sure email confirmation would work best.

So, now let's say I have a box checked that confirms the buyer read and understood the description on the customers order invoice. And I get a chargeback that says item not as described / item defective. That check box doesn't seem like it would help, because all they said was they understood the description, but the chargeback is saying the description was wrong.

I have called my merchant account provider, and explained the situation with the regions and my warning and all, and also how to prevent these. I asked how can I prove the item was perfectly fine and as described if the chargeback only states item defective / not as described. And the guy told me just fax them the item description, invoice, and any other details on the order. I did that before and lost the case.

That's why I was saying don't put I understood the description but I understand that certain DVDs in this order may not work if your DVD player doesn't support that DVDs region.

Or something along those lines.

The issue here isn't how to prove you didn't lie about the description - the issue is that consumers are dumb. You need to protect them from their own stupidity and, in the process, cut down on chargebacks. In other words, stop looking at it like "how do I fight the chargebacks." and look at it like "how do I prevent them in the first place.".

For whatever reason, the people ordering from you aren't understanding the current warnings...so you need to find a way to actually beat them over the head with it. My gut feeling is that any kind of "click here" kind of warning is not going to be read. With the email, people will have a better chance of reading it, especially if you start off the email with "YOUR ORDER HAS NOT YET BEEN PROCESSED - PLEASE READ BELOW" and then keep the warning short and simple. Most people will probably then follow up with the reply, so that you can process their orders. Those that don't, give them a quick phone call.

Sure it cuts into your profits, but it will also eliminate chargebacks. Unfortunately, we run into the same thing with hosting. We now voice verify hosting orders, which can start to add up when you're calling alot of people each month all over the world...but the savings in chargebacks and fraud orders has been worth it.


--Tina

I'd have it so an automatic email is sent out, to confirm that they realise they have ordered an import (you could also include links to online sites which sell multi-region dvd players - get commission?)

The bottom line is that no matter how blantantly you put it, there are always people that will be too stupid to heed your warnings. Coincidentally these are also the people with whom you can not communicate logically. Your best bet is ALWAYS to send them a full refund and do anything you possibly can to make sure you never hear from them again (chances are they'll not buy from you again, even after you give them the refund they ask for - count that as a blessing!)

Not sure about the other people who have replied to this thread but I'm speaking from experience as I deal with similar issues on a daily basis. People can't understand the concept of an online store. Trust me, the refund you give them (even if you don't get the item back) is far less expensive to you than the price of a chargeback coupled with headaches, emails, bad publicity, and anything else that may go along with this.

Also ditch the restocking fee. Those are always redflags as everyone knows they are bogus. You either take it back or you don't.

It's best just to count refunds and problems into your financial planning and hope your quantity of sales covers and makes up for any issues that arise. It's really a basic part of every business and you can't think too much about it or you'll stop focusing on the positive aspects of your business that can likely cover any negatives that will arise.

Just my 2 cents

Alright, that does make sense, saying some items in your order may not work if you don't have a dvd player that supports that region. That would cover the real reason for a chargeback, but I suppose there isn't a good way to fight fraudulent chargebacks (they say the dvd is the wrong one, when the only problem is the region).

Also, I meant how to fight these chargebacks, then put a way to prevent them in the future. It's not fun fighting chargebacks as we know.


lappyhappy - You could not be more right! As for the restocking fee though, I don't think it's bogus, if I get an open dvd back, my only option would be to sell it as an open item elsewhere. The restocking fee wouldn't cover the decrease in price I'd have to sell it at, but it would help. And I only offered the restocking fee for this case. My normal policy is no returns on open items. And I understand chargebacks are just a part of business, but getting hit with $35 chargeback fees on items that rarely exceed $25, hurt, especially during the first few months.


So, if I get a customer who didn't care about the region warning for example, and requests a refund. Do I just instantly offer a full refund? Or do I try to work with them, or what? What if a customer wants a refund on an item that isn't worth it to me to get back? (<$5 item, if they demand I pay shipping, items I can't sell if they are open?) What are the rules on that? I don't want it to get around that you just have to ask for a refund and keep your item at my store.

Thanks again for all the replies.

What you should do is something like this into your TOS, and make SURE they have to accept it before you checkout. This way you have a standing chance with the CC agent:

Put notice in your TOS that ONLY physically defective dvds will be accepted for returns, and the customer must contact you in order to get an RMA for all returns.

In addition, for online visa/mc transactions, get complete authorization, use something like fraudgate (www.fraudgate.com) to get voice authorizations for the charge.

Thirdly, get the customer to fax in a copy of the card, in a form of sorts with the card # and all that, stating that they agree to the charges. Emails and images work as well (pdf, etc).

Doing the above three can help reduce the chargebacks you receive. Unfortunately, individuals will still TRY to chargeback, but this is incredibly common.

HTH

Although I agree with linux-tech... the third piece of advice, fax a copy... this is the 21st century, most people didn't have fax machines originally, they're even less likely to with the success of email etc.

I know had it not been for the fact I run a business I would not have a fax machine.

And apart from those in business, I know absolutely nobody with a fax machine.

So I'd rule that one out unless your dealing with businesses (but given the target market it sounds more like home users).

Chris

Like I said, in most cases, scans of the original form will be accepted, and most every printer out there that I know of will also function as a scanner.

In addition, because you're doing business online, you don't have a physical copy of the card. Because of this, you have almost no chance with the companies whos only concern is their customers, not your silly online business that can't even bother checking the person's credentials, because the card is not swiped or present.

The above was given to me by one of the largest merchant account providers out there, actually, and it will help in this matter.

Faxes are a pretty large part of business, and requiring physical proof of the customer having the credit card will help you in this stuff.

I still disagree... especially with the printer statement.

I know very few people who have all-in-one machines and those that do - very few know how to use the fax feature as they've never needed to send or receive one.

That's just from personal experience though.

lappyhappy - You could not be more right! As for the restocking fee though, I don't think it's bogus, if I get an open dvd back, my only option would be to sell it as an open item elsewhere. The restocking fee wouldn't cover the decrease in price I'd have to sell it at, but it would help. And I only offered the restocking fee for this case. My normal policy is no returns on open items. And I understand chargebacks are just a part of business, but getting hit with $35 chargeback fees on items that rarely exceed $25, hurt, especially during the first few months.


So, if I get a customer who didn't care about the region warning for example, and requests a refund. Do I just instantly offer a full refund? Or do I try to work with them, or what? What if a customer wants a refund on an item that isn't worth it to me to get back? (<$5 item, if they demand I pay shipping, items I can't sell if they are open?) What are the rules on that? I don't want it to get around that you just have to ask for a refund and keep your item at my store.

Thanks again for all the replies.


No, do not offer an open-ended "full refund no questions asked" policy. You're on the right track with making the warnings as visible as possible, and trying to work with the customer when this issue arises. Just don't get too caught up in the debate when those "problem customers" come around. Count it as part of the business expenses, come to an agreement as quickly as possible, and move on as quickly as possible. Even if it means completely returning the full price due to no fault of your own. To me that would be the hardest part to get past - me paying for someone else's stupidity. But experience has taught me that it's just a battle you can't win, and unless you can become ok with letting it go, you'll have a lot of headaches ahead of you. My way of "letting go" is by counting it as a biz expense and know that the happier the person is, the less I'll hear from them (and that even though I bent over backwards and gave them a full refund, they probably will still not buy from me again. Once again, I consider that a GOOD thing. At least they won't be able to say I didn't give them the best customer service they could ask for.)

Again, sounds like you have all the warnings there you can possibly put. Maybe an extra checkbox or warning will help, but you're ALWAYS going to have stupid people you'll have to deal with. It's just part of the biz. Just don't let a stupid person cause you suffering in the form of headaches and extra time spent on deals that don't put any money in your pocket.

after they click add to cart

have a page in between that has a massive piture of a dvd player and shows that not all dvd's will work. have it in big writing too

no point emailing them after they placed the order as otherwise you still end up wasting time and paying processing fees.

Hi,

1. You have to talk to your merchant provider and see if there is possible to do not make a chargeback right away.
2. You have to put some confirmation system and probably validate each customer via phone. call them and talk to them before deliver to them product. I know this is pain in *** by this will help to avoid charge backs and purchases using stolen CC.
3. Put some type of agreement at your website about this.

Thanks again for the replies.

For the ones that say phone verify all orders or have people fax in their documents. I have a pretty good fraud screening system, and I have not had any problems with stolen credit cards or anything of that sort. So I don't think I will need to do that. My problem isn't fraudulent orders, but people not reading the description.

Is it possible to just settle a chargeback? Like chargebacks that I believe I won't be able to win or ones that the customer didn't contact me about? Can I just tell them I'll give you a full refund, drop the chargeback or something? Can I just go refund the payment in my terminal when I get a chargeback notice, or will that result in double the money taken from me? If it is possible to drop a chargeback and issue a refund, will there still be that chargeback fee?

While I am concerned about losing money from chargebacks, I understand it's part of the cost of online business. However my main concern is loosing my merchant account over excessive chargebacks.

how much is a charge back.... if you refund the money before the charge back date, do they get deducted from your account twice?

Thanks again for the replies.

For the ones that say phone verify all orders or have people fax in their documents. I have a pretty good fraud screening system, and I have not had any problems with stolen credit cards or anything of that sort. So I don't think I will need to do that. My problem isn't fraudulent orders, but people not reading the description.

Is it possible to just settle a chargeback? Like chargebacks that I believe I won't be able to win or ones that the customer didn't contact me about? Can I just tell them I'll give you a full refund, drop the chargeback or something? Can I just go refund the payment in my terminal when I get a chargeback notice, or will that result in double the money taken from me? If it is possible to drop a chargeback and issue a refund, will there still be that chargeback fee?

While I am concerned about losing money from chargebacks, I understand it's part of the cost of online business. However my main concern is loosing my merchant account over excessive chargebacks.

If you want to avoid the chargebacks but are ok giving refunds then put a note on your "order confirm" page that says "if you have any problems with this product or are in any way not satisfied... bla bla bla" and then have an auto email sent w/ the same info. That way you can issue manual refunds before anyone does a chargeback.

arent chargebacks cheaper then refunds?

i suppose it depends on ur merchant

for us chargebacks are free.- refunds cos bare bucks.

we still do refund where we can but moment we get a chargeback, we let it go through- otheriwse u might loose out twice.

some people still clawback even when you hve refunded. piss take isnt it

arent chargebacks cheaper then refunds?

i suppose it depends on ur merchant

for us chargebacks are free.- refunds cos bare bucks.

we still do refund where we can but moment we get a chargeback, we let it go through- otheriwse u might loose out twice.

some people still clawback even when you hve refunded. piss take isnt it


Free chargebacks?!? Chargebacks are among the biggest issues facing business owners that want to process payments. If there's really a merchant offering free chargebacks then please let us know as they'll quickly put out of business every other provider - unless of course they're covering the chargebacks with a bogus monthly fee or other type of charge.

Yes, there are plenty of merchants offering free chargebacks but only if you weren't taking their payment fraudulantly.

BMS dont charge admin fee with chargebacks

yeah as ki-ChriE says

So it costs nothing to you when someone issues a chargeback? How much are your monthly fees? they have to cover the chargeback fees somehow as visa/mastercard charge the fees to the provider

Well my monthly fees are nothing.

i dont have no monthly fees either.

KI-ChrisE who is your provider?
I am with OnlineData and Authrorize.net. No idea what charge back fees are (3 years and have not had one) Knock on wood. but certainly can see where it could be bad.

Here is another situation, I appreciate some feedback as how you would handle this situation and try to prevent a chargeback.

I received an email from a customer who placed a rather large order with me about 30 days ago. Apparently, the customer gave me the wrong PO Box # (switched 2 numbers). All my documentation shows that I shipped to the exact address on file. Now I check the delievery confirmation number and it appears the package was rerouted all the way to Arizona. I believe the customer did accidentally switch the 2 numbers in the PO box, but I can't believe that I should be the one responsible for the over $200 in lost merchandise due to an error by the customer.

What am I supposed to do in this situation? Thanks

ITAhmed. SimplyPay. They use Deutche Bank to provide it.

ITAhmed. SimplyPay. They use Deutche Bank to provide it.


Please, everyone that knows of providers that don't have any fees for chargebacks, please post more info. What are the total fees in getting setup and using your provider? Do they accept orders worldwide? In the states the fees are very high with all the normal providers and they charge monthly fees and chargeback fees

Thanks!

Here is another situation, I appreciate some feedback as how you would handle this situation and try to prevent a chargeback.

I received an email from a customer who placed a rather large order with me about 30 days ago. Apparently, the customer gave me the wrong PO Box # (switched 2 numbers). All my documentation shows that I shipped to the exact address on file. Now I check the delievery confirmation number and it appears the package was rerouted all the way to Arizona. I believe the customer did accidentally switch the 2 numbers in the PO box, but I can't believe that I should be the one responsible for the over $200 in lost merchandise due to an error by the customer.

What am I supposed to do in this situation? Thanks

It depends what your proof is that you have. If you have real proof that they told you the wrong address than it's their fault, you just filled the order according to what they said.

Anytime you have to deal with this sort of thing, what I do is look at my cost and profit on the items in question. I definately don't want to be out anything if I can help it, so the bottom line is my cost on the items (the profits for one order I can let go of if needed to settle things.) So maybe apply the profits from the last order to their new order, or offer to do an entirely new order at your cost.

What is the customer wanting?

Well of course the customer wants either a full refund, or their order. They did admit to giving me the wrong address. Which is just crazy, they are actually upset at me for filling their order as I was given. I have an email of them admitting they gave me the wrong address, but I am trying to avoid getting a chargeback. The loss will be pretty big on this one...

you should have a chance to dispute the chargeback before it happens. if you show you shipped it to the address they gave you (and they admit it) then you are not at fault. be sure to always correspond with the customer with "we" and "our policy" and never say "I can or can't do this..."

If there's some way to contact the company that would handle the chargeback directly that'd be a good idea.

lappyhappy - from what I've found out, the fees in the states are a lot less than the fees in britain. Or so it seems.

for temp09

The credit card company will always favour the customer because that is where they make their money (on the very high interest charged for outstanding balance). But if you can prove that you shipped the order to the address that the customer gave to you, and the customer accepts that this is the address given, you have a very good case. You will need documented proof that the items have been shipped to and received at the shipping address given by the customer.

If the card company makes the chargeback anyway you will have to either accept it or persist with your action.

Another thing you have to watch for is scammer. They will order import DVD knowing that after they make copies of it. Later, they can simply return for refund saying that it don't play. So have a strong order/return policy for import DVDs. 15% Restock Fee is standard. Email them before processing the order warning them about the region restriction. Make sure they check box for warning notice about import CD, Return Policy, etc. Hope these helps...

Please, everyone that knows of providers that don't have any fees for chargebacks, please post more info.
Thanks!

If any provider truly does not charge for chargebacks, they will stick you elsewhere. Merchant account providers are charged by Visa/MasterCard for chargebacks. That is why they charge you. Why would a company take on someone that has a history of chargebacks without a chargeback fee in palce? It;s a guarentee to lose money.
If they do sign you up with no chargeback fee and no other crazy fees, they will just shut you down later on when they realize they are losing money.

Alright thanks for the help.

Another quick question. Let's say I get a chargeback that I know I won't win, like orders that went through before I put up any type of safeguards for my business. I'm a very busy person, and it wouldn't be worth my time trying to fight a chargeback that I know I will lose. Will not responding to a chargeback make my company look bad? Will I get on the tmf with visa/mc if I don't respond to chargebacks, or what will happen. I don't want to get on the blacklist, but after speaking with other online video shops I hear it is very common for people to file chargebacks months (3-6) after receiving their order for reasons like they are done watching it, or sick of it...etc. It's not right, but I have ran my business without a lot of the safeguards for some time as I am learning as I go and I'm worried about my companies future with payment processing. Am I being too worried now?

And I'm mostly worried because of the number of chargebacks I have gotten in the time I've been processing due to scammers and people who aren't reading warnings.

BTalbot - not the case. They evaluate every scenario so your likely to get no chargebacks but if your saying you've had a history of chargebacks then they're not going to willingly give them free.

Alright thanks for the help.

Another quick question. Let's say I get a chargeback that I know I won't win, like orders that went through before I put up any type of safeguards for my business. I'm a very busy person, and it wouldn't be worth my time trying to fight a chargeback that I know I will lose. Will not responding to a chargeback make my company look bad? Will I get on the tmf with visa/mc if I don't respond to chargebacks, or what will happen. I don't want to get on the blacklist, but after speaking with other online video shops I hear it is very common for people to file chargebacks months (3-6) after receiving their order for reasons like they are done watching it, or sick of it...etc. It's not right, but I have ran my business without a lot of the safeguards for some time as I am learning as I go and I'm worried about my companies future with payment processing. Am I being too worried now?

It's not going to be Visa/MasterCard. They are not concerned with your chargeback history. It is your merchant provider who will have an issue with them. They are the ones open to the risk. I would call your provider and ask them if it matters to them or not. They may track who replies and who doesn't, or they may not. It is up to each provider to decide how to treat customers with chargebacks.
What is standard accross the board is that if you have A LOT of chargebacks, win or lose, you will eventually get shut down as the profit to risk ratio just gets too low for the company to "take a chance on you".

I have had this business and merchant provider for about 2 months now, processed about 300 transactions and have received 5 chargebacks total. I understand that videos and dvds are a more risky product than say selling t-shirts, but I don't know if my merchant provider understands that. So, if I get dropped because of chargebacks, will I still be good with visa/mc and be able to obtain another merchant account elsewhere?

I have had this business and merchant provider for about 2 months now, processed about 300 transactions and have received 5 chargebacks total. I understand that videos and dvds are a more risky product than say selling t-shirts, but I don't know if my merchant provider understands that. So, if I get dropped because of chargebacks, will I still be good with visa/mc and be able to obtain another merchant account elsewhere?
While you may be able to get another account, you'll likely be labeled "high risk" and have to pay a yearly fee to accept cards. For busiensses raking in money, like porn sites, this fee is well worth it.

THIS IS THE ONLY TRUE SOLUTION THAT COUNTS:

YOU MUST contact your merchant service provider, and ask them what steps you must take to avoid chargebacks. Ask them for the Visa/Mastercard policies for all your credit card transactions and what you must do to protect yourself from any chargebacks. And do what they tell you to do!

It does not matter what anyone says in their response to your inquiry on this post, as it will not matter at all. You cannot ask for anyone's advice here and go by that, it is all VOID!!!!! Do what your merchant service provider tells you to do, as they all have different policies.

Also, it all depends on what credit card was used to pay for the product.

Visa, Mastercard, American Express, and Discover are all 4 separate companies and have different policies regarding chargeback procedures and what they look at to make a decision on who wins a chargeback (cardholder vs. merchant).

THIS IS THE ONLY TRUE SOLUTION THAT COUNTS:

There, you are wrong, flat out, deniably wrong
There are plenty of individuals here who have been victims to fraudulent chargebacks, and those who have had chargebacks doen on them. Coming here is a very viable solution, and the advice offered by many here, while, not legal advice, is certainly a good deal better than waiting on hold to get to some suit who doesn't care two bits about your business. Most (note: most) providers of these services are just that, suits in a big bank. Yep, somewhere, buried in the middle of something, ultimately is a bank, usually.

There are a few exceptions to this rule, really. CDG is one of the best ones out there. As a professional provider of services like this, his advice is well respected amongst the comunity, and should be as such..

When you come to WHT, you get a mixture of stuff. You get good, you get bad, you get naysayers, you get those who clearly don't know what you're talking about, but you usually (usually) end up being able to walk away with reasonably sound advice (if you can take out all the usual flames the individuals tend to throw around here), from individuals who have probably been in the business longer than the one asking the question.

At the end of the day, no , WHT is not a "lawyer", or a "business consultant", it is a team of individuals, a community, here for the assistance of others. To disregard, or put down the recommendations by professionals here, as you have done is quite offensive, and it only shows your lack of respect for tha assistance given by individuals here. I hope you'll remember this when YOU, yourself find yourself in trouble here.

linux_tech,

Please settle down. What you are saying is listen to everyone else's advice in this forum and forget about what the merchant service provider and Visa/MC policies.

And I am not talking about the 3rd party processors like paypal, etc. as they are another story. I can understand that there are companies that do not care about your business. It happens every day. They are heartless and don't care. But educating yourself about everything you need to know about accepting credit cards and preventing chargebacks will help you avoid conflicts with companies that don't care.

Here are some articles on Visa policies you can read:
http://www.usa.visa.com/business/accepting_visa/ops_risk_management/index.html?it=c|/business/index%2Ehtml|Operations%20%26%20Risk%20Management

Read these PDF docs to help you get started:

E-Commerce Merchants' Guide to Risk Management (http://www.usa.visa.com/download/business/accepting_visa/ops_risk_management/visa_risk_management_guide_ecommerce.pdf) PDF | 1.2 MB
Rules for Visa Merchants (http://www.usa.visa.com/download/business/accepting_visa/ops_risk_management/rules_for_visa_merchants.pdf) PDF | 3.8 MB
If the Card Is Not There—You Need to Be More Aware (http://www.usa.visa.com/download/business/accepting_visa/ops_risk_management/card_not_there_aware.pdf) PDF | 188k
Cardholder Information Security Program Overview (http://www.usa.visa.com/download/business/accepting_visa/support_center/cisp_overview.pdf) PDF | 108k
Card-Not-Present Fraud Detection (http://www.usa.visa.com/business/accepting_visa/ops_risk_management/card_not_present_detection.html)
Improve detection capabilities with Card Verification Value2 (CVV2)

I am not putting down everyones advice here, as you can get alot of great ideas and advice. I am just stating the facts and the truth that ultimately, at the end of the day, you have to go with your merchant service provider and ask them what their policies are, which will be the exact same policies of Visa/Mastercard.

if you follow their policies, you will not lose a chargeback, or your chances of losing a chargeback will be little to none, depending on the situation. if you have a merchant account, you have a contract agreement you have to abide to, and you have to go by Visa/MC policies for accepting credit card transactions.

If you take the time to learn these policies and carefully read and learn your contract, this will help you conduct business and accept credit card payments with minimal risk to your business.

I deal with chargebacks each month and have been in the credit card processing industry for 9 years, so I can provide sound advice from years of experience delaing with these issues on a monthly basis.

But in no way do i mean to offend anyone. My apologies for that. Maybe i should have reworded my post.

Please settle down.

Actually, there's no need for me to "settle down". I didn't come in here blaring , screaming "THIS IS THE ONLY WAY", you did. I didn't come in here and attack seasoned veterans as a new user, you did. You're the one who needs to settle down, learn some nettiquete and enjoy the forums. Attacking others for making posts here, for trying to help them, or claiming "they're all wrong" isn't going to get you anywhere fast here ;).


What you are saying is listen to everyone else's advice in this forum and forget about what the merchant service provider and Visa/MC policies.

Please, tell me exactly where I said ignore the provider and Visa/MC policies? I didn't.

For the record, what I have stated has come directly FROM my provider (and I'm not talking paypal either), one of the largest merchant providers out there . I've been in business for a few years now, and will continue to be for a number to come. In those years, I've had 2 chargebacks brought by the same guy, and, in both cases, those were reversed, successfully. Of course, then he pulled the classic "I didn't order this" and the reversal was reversed, but that's neither here nor there.

It's not a matter of "settling down", it's a matter of addressing facts. You claim the only valid method is the provider, but that's just wrong. There is a mixture of the provider and experience that needs to be found in each business.

Regulations are one thing, addresses must be verified, t's must be crossed, i's must be dotted, all that stuff. However, regulations can only get you so far. At the end of the day, all that client needs to do (and again, directly from one of the largest merchant providers out there, whom I've been dealing with for 3 years) is say "I did not authorize this charge", and you must automatically forward some sort of proof that he (or she) did. If you don't, your provider won't even touch the chargeback. This proof can be done through the individual using the fax method (which I believe I posted) or phone verification. Either should be acceptable.

Business suits work 9-5 in a 24/7 world. They're not going to be here @ 5am answering posts, they're not going to help you set things up for your individual processing application (mb, etc). They're going to go home at 5pm, see you on Monday, and skip Holidays. At the end of the day, this forum is about real world people sharing real world experiences, not individuals walking in and claiming in a stuffy voice that "THIS IS THE ONLY WAY".

There's a million ways to do something, not all of them right, not all of them wrong. There ARE, however many ways to do something "right". The only thing you can do is adapt to what you've learned from seasoned, experienced individuals, which is what the OP was asking for here, help , not stuffy manuals or documents to read that take hours to go through, and can't be read unless you have a doctorate in law, or some sort of similar education.

Am I saying WHT should be the place to go instead of the provider, or anyone should take my personal advice over the providers? No, however, realistically, some people just can not wait all day long for their provider to assist them, and in this case, the user was asking for personal advice on how to prevent these things, not some provider, formulated response.

Linex-tech,

I do not want to get into a pissing contest with you. I admitted my post was wrong and i should have worded it differently and explained myself better. But i was wrong. My apologies.

For everyone else,

Every merchant service provider, bank, or processor handles chargebacks differently and has different policies on how they handle these issues. Their policies can go from one extreme to another. Visa/MC have clear rules and guidelines, however, the banks/processors/merchant service providers have different policies on enforcing the chargebacks, but most of them are pretty consistent in some ways. It just depends.

Education is key. Take time to learn the policies and rules to preventing chargeback losses. Your first point of contact would be to contact your merchant service provider and ask them what you can do to avoid chargebacks and also avoid losing chargebacks. Ask them what is required to accept a credit card payment from a customer and show proof of sale, delivery, and a way for the customer to view and accept your return policies.

Just like anyone doing business with Chris at CGCommerce (I know him, he is a great business owner), and if you contact them, they will provide you with outstanding service and support so you can learn and understand how to avoid losing chargebacks. They will take the time to teach you and help you. Other companies may be worse or not provide this for you as it just depends on who you are processing with. But make every effort to contact them and understand their chargeback policies. Make them put it in writing and follow their instructions and rules. If they dont help you, maybe it is time to move to another provider. Your business is on the line here.

But remember, use your merchant service provider as your first point of contact when learning the rules and guidelines. Their policies are what will count. Getting advice from other sources like this forum will help as well, but make sure the advice you get is consistent with the company you process with. If you had to make a decision to do something based on advice you got on the forum, or do something a different way based on the policies of your merchant services provider, you better listen to your merchant service provider first if they are not consistent. I accept credit cards myself for my business, and it took me 3 calls to my merchant service provider to learn of their rules and guidelines that I must follow in order to protect my business and avoid LOSING a chargeback. If i do what they tell me to do on every sale, my chances of not losing are slim to none.

Their policies are what will count.

A perfect example of where this is not necessarily the case is regarding phone verification.

We won a chargeback based on documented call detail (inbound from our 800 and outbound direct-dial) to the customer. The customer DAK'ed but couldn't explain why their number appeared on inbound and outbound call detail.

There is NO DIRECTIVE in Visa/MC/Amex information that tells you to call and verify; or get the customer to call you. And it isn't something you do every transaction. But we did it and it saved us.

There is NO DIRECTIVE in Visa/MC/Amex information that tells you that an ADULT must sign for a shipment. However, a "child" can't enter into a contract -- and in practical use -- a signature delivery receipt is a contract. This is a rare claim - but it has worked.

This is where listening to the experiences of others is a benefit.

You claim the only valid method is the provider, but that's just wrong. There is a mixture of the provider and experience that needs to be found in each business.

Absolutely.

Wow, this has been a busy thread. :) I guess if nothing else, this thread and the amount of activity on it proves just how much confusion still exists pertaining to chargebacks by merchants in this and other industries.

That being said... this forum and others like it along with documents like those that Robert pointed out, are definitely a good way to learn more about them. As with anything else, it is always important to consider the source of any information so everything you see on any forum should have that taken into account.

It is unfortunate, for instance, that sometimes incorrect information is also passed along.

For instance, I saw one poster in this thread mention that Visa and MasterCard "do not care" about a merchant's chargebacks.

That is simply not true as Visa and MasterCard do indeed monitor chargeback performance and a plethora of other metrics on a variety of levels and in fact if a merchant falls into certain CB ratio thresholds, it can trigger placement of the account onto a chargeback monitoring program which can escalate into audits and financial penalty fees being passed through to the Member Bank and - subsequently - the ISO/MSP who manages the merchant account.

These financial penalty fees often start a $10,000 and can quickly increase to $50,000-100,000+ or more. I can tell you firsthand that the Visa operating rules & regulations manual has hundreds of pages devoted almost solely to financial penalties.

In addition, contrary to another posting in this thread, fees like chargeback fees are not assessed directly by Visa and MasterCard but are typically passed through from the settlement network contracted by the ISO/MSP for its merchant accounts.

The exact chargeback cost that is incurred varies from one settlement network to another and even between one ISO/MSP contract and another. However, in all of these circumstances, every merchant processor that I know of passes through the cost to the merchant in the form of a chargeback service fee.

In the event of a successful chargeback representment, the ISO/MSP does NOT get this fee "funded back" to them. The chargeback fee is not a penalty fee but rather a servicing fee for the handling and processing of the chargeback.

In fact, in most cases, the settlement network contracted by the ISO/MSP will have an entire department dedicated to "exception processing" - i.e. the handling of retrievals and chargebacks. There are real costs to implementing this including training and maintaining an appropriate level of staffing, the printing & mailing of retrieval & chargeback notices and the IT systems needed to track, notify and respond to exceptions. The costs are covered by the chargeback service fee costs that are passed through to the ISO/MSP and then recovered by the ISO/MSP by assessing a chargeback fee to the merchant.

Certainly, different merchant processors address the handling of chargeback issues in different ways. As with any service-oriented business, while the back-end pieces may be similiar, the front-end experience to a merchant might vary widely and I know from first hand experience that some merchant processors have a defeatist attitude with respect to Internet-originated chargebacks which is definitely something that you'll want to avoid as a merchant.

It is also very important for every merchant to understand their merchant processor's perspective on chargebacks and how risk issues are handled. Some merchant processors are more lenient when it comes to chargebacks than others -some very conservative processors will hold funds or shut down accounts at the first hint of a problem whereas others will take the time to investigate a situation in more detail.

In my opinion, while chargebacks and risk issues are never happy situations for anyone - the ideal scenario is for both the merchant and processor to work together as a team to resolve them. The end result is that there is a lot less frustrating, funds are released much faster and the ending is a positive outcome for all parties the majorty of the time.

Chris,

Thanks for your detailed explanation of chargeback risks. I am no expert, and your advice is great. It basically reiterated what I was trying to say.

Everyone on this forum has some good ideas on what to do and not to do, just make sure you review your sales, shipping, and delivery of goods policies with your merchant service provider to make sure they will accept that. All merchant service providers have different policies when investigating a chargeback and have different criteria when making a decision to honor or deny a chargeback request.

From my experience with American Ecpress, if you have all the documentation, and you have a signed invoice from the customer with your refund policy stated on the invoice they sign, AMEX will rule in favor of the merchant if the cardholder asks for a refund. If you have "No refund" on your invoice, then the cardholder will lose. But it also depends on the type of merchant, type of transaction, and type of product you are selling.

Thanks for all the great info.

I have another question yet again... a customer placed an order with me a few days back, and ended up not ordering the right item they wanted. So the item is shipped, and I get a delayed email saying they want to cancel their order and will be placing a stop payment on the charge. In an attempt to prevent another chargeback, I quickly went in and refunded the full amount, and asked the customer to refuse delievery or return the item. Because this was a delayed email, I do not know if the customer already did the stop payment. Like I said I refunded the amount already. If the customer did do the stop payment, will my merchant provider hear about this still? And can this result in a chargeback?

Regarding the situation that you mentioned - if you have already issued & settled the credit return (refund) against the original sale, then you will have a valid representment in the event that a chargeback is attempted by the cardholder.

However, in most cases... since the credit return was posted so promptly against the sale - if they call up to dispute the sale, the credit return will be visible by the issuing and the situation should be stopped from further escalation at that point.

That being said, during the rare but occasional situation when a chargeback dispute was already processed with the issuing bank and where the credit return is done after that point, it is possible that a chargeback may still come through.

However, the good news is that some settlement networks are "smart" enough to do an automated query on any incoming chargeback to see if a matching credit was issued against the original sale and if so - it will do an "auto-representment" without even debiting your bank account for the amount of the initial sale. (However you will likely still incur the chargeback service fee)

Even if this is not the case with your particular merchant processor, the chargeback can be easily remedied by supplying proof of the credit return that you issued and a brief letter indicating exactly what you've mentioned to us in this thread.

In doing so, make sure to follow the exact steps for a chargeback rebuttal/representment as indicated by your merchant processor and respond to it in a timely manner. That will then result in your chargeback-debited funds being reversed back to you so that you are not, in effect, double-charged on the transaction.

Hope that info is helpful!

Thanks, the original transaction was received yesterday morning, settled at 5pm yesterday. The refund will be settled today at 5pm. The customers email was sent yesterday morning saying a stop payment will be placed. Will the credit card company even allow that, there was probably like an hour or two between the sale and the email saying a they will stop payment? They should require a time period to await contact from our company. And is a stop payment essentially a chargeback?

I think that when your customer used the term "stop payment", they were using it very loosely.

In the normal sense of the word, a "stop payment" is an action taken by a bank on a check and it has nothing to do with a credit card transaction. In other words, if someone writes a check to a merchant and then changes his/her mind and calls their bank, the bank can dishonor the check when it is presented for cashing/deposit.

My assumption here - and we all know what assumptions are sometimes worth :) - is that your customer was using the phrase "stop payment" when he really meant to say "refund" or "chargeback."

Yeah, I also assumed they meant chargeback, but thought I'd use stop payment as that's what I was told. I've never had to dispute a credit card purchase that I've made, so I'm not sure how that works. Isn't there a mininum wait to file a chargeback to contact the company? And after a customer contacts their credit card company to dispute a transaction, do you know how long it generally takes for them to start processing it?