How To Avoid Chargebacks
More and more businesses are done online nowadays. This can be a good and bad thing for many vendors. Of course, the vendor has a chance to greatly increase their revenue by opening up to a whole new customer base. However, most online transactions are made with a credit card. Along with credit cards payments, vendors are starting to see an influx in chargebacks. Chargebacks can be costly and unfortunate, but they are just a part of doing business. With that being said, there are ways for vendors to protect themselves from financial loss. You will learn more information about how to protect your business below.
Understanding a Chargeback
A credit card chargeback occurs when a customer buys a product from the vendor and for a specific reason, they are unsatisfied the transaction. The customer may contact his or her credit card company to dispute the charges. If the insurer verifies that the complaint is valid, then the vendor is going to be forced to refund the payment. Along with refunding the payment, the vendor is also going to have to pay an additional chargeback fee. Depending on the circumstances the additional fee could be anywhere from $14 to $100.
The insurer of the credit card may declare the disputes valid for several different reasons.
- The customer did not receive the item they ordered
- The customer’s identify was stolen
- The product was not advertised properly
- The customer was incorrectly billed for the product
- Customer doesn’t recognize the charges on his or her credit card
Prompt Customer Service
One of the best ways to get ahead of a chargeback fee is the dive into it early. Your credit card processor is going to offer chargeback notifications quickly, so you can find out what the dispute is about early on. Take advantage of these notifications, so you can head off the problem and try to avoid it altogether. Get in touch with the customer, if the situation requires you to do so.
There are a lot of companies out there that have never lost a chargeback dispute and this is due to the fact that they got the transaction in writing. Make customers sign a contract that identifies right down to the details about the product or services that you are providing. These contacts can be signed in a variety of ways fax, e-mail, or electronically online. Get the customer’s authorization in writing.
Learn To Spot Fraud
Always try to stop the problem before it happens. For instance, if someone purchases 15 flat screen TVs priced at $300 apiece this should throw up a red flag immediately. Contact the credit card company and have them verify the charges, before the order is processed.
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