I sell proprietary information on my website (password access). I have been doing this since 1999 and incur approximately 2k - 3k in chargebacks each year. Never has a chargeback resulted from a lost or stolen card. The majority are from users who failed to cancel their reocurring memberships (stock trading website). The average charge is $200 monthly.
Recently an individual has disputed $425 in charges. I presented all of the material to the merchant who then represented the charges on my behalf. The credit card company refused the representment and issued the chargebacks for the second time. The reason code was initially that the member did not authorize the charges. I have presented to the credit card company (through my merchant bank) a hand written membership agreement (by the cardholder) that states the member understands that his credit card is going to be charged $200 monthly until he cancels.
So the merchant bank started pre-arbitration on my behalf with this letter. The response from the credit card company CITIBANK was this:
The card was not present. The merchant got a signed agreement and therefore should have been able to get a signed sales slip authorizing the charge by the cardholder. The agreement the cardholder signed merely states that the cardholder agrees to a charge but does not specify that the cardholder authorized the charge to his MasterCard credit card. Cardholder maintains that the charge is not authorized.
Now, isn't that the fanciest dancing you've ever heard?
Is there any way to make this right? If my company did something like this I would be sitting in jail.
It sounds like the issuing bank is justifying not reversing the chargeback based upon the fact that the card # was not on the signed agreement.
In other words, it was just an agreement to pay but the card # was not specified and listed on the same document. From what you have posted, it seems they are stating that as the reason why they will not reverse it. Not to mention, the cardholder is still claiming unauthorized use which is a difficult one to counter.
You could probably take it to a formal MasterCard arbitration but if you lose, it would cost you many hundreds more on top of the money you have already incurred.
My suggestion: use the documentation you have and take the customer to small claims court or send them a collections agency in the hopes of recovering at least part of your lost funds.
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That sure is some fancy talking. The lawyers employed by these credit card companies certainly know how to tip toe around the law.
Good luck basscat
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If you do plan to go to small claims court and your aim is to get your money you should name all possible litigants. That includes the 3rd party merchant proccessor, Master Card International and the person that signed up for your service and you should sue all for the maximum amount.
These cases are likely to be calandered on the same day unless they try and switch dates on you or you agreed to arbitration in which case they may attempt to change the venue.
Litigating against all possible parties involved is the best way to maximize your chances to attain the money you feel you are owed. If one party chooses not to show up they will likely be the one the judge chooses to rule against.
You might consider Verified by Visa & MasterCard Secure Code. This would help you with the first transaction. You would have to set something up so the person would come back to your site to "re-authorize" the transaction. This would prevent the I didn't do it & the I didn't auhtorize it. Plus you will get a discount from your acquiring bank when you use VBV.