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Chargebacks are something
businesses have to contend with in their dealing with customers.
Any
eCommerce business cannot work without an online payment
operator, and chargebacks are a necessary evil that comes with
the package. But first, what are chargebacks? |
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Chargebacks are simply the request for a refund made by the customer
to the bank operator for any product or service they have availed
from a business. The customer disputes the transaction made, and
several reasons could be there behind it. First, it is possible that
they mistakenly made the transaction or have been on the receiving
end of fraud. Second, they could simply not like the product or
service delivered to them and want their money back. There is also
the
chargeback fraud that one needs to consider as well. Now, the
question is what the business should do when customers force refunds
and chargebacks.
First, be aware of the chargeback reason codes
Any chargeback request comes with the reasoning behind it. The
grieved party has to make the case to the payment provider and the
business why they are correct in their dispute, and the matter
should be settled as quickly as possible. So, it becomes crucial
that the business operator is well aware of the hundreds of
chargeback reason codes to properly respond to the claim.
Luckily, these codes are not difficult to understand and are
generally divided into eight categories. If the business is aware of
the chargeback codes, they can also prevent the refund from taking
place.
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Check Chargeback Red Flags
It really should surprise anyone that chargeback is a popular way
for fraudulent actors to get some quick money without much effort.
Merchants around the world have been on the receiving end of
chargeback fraud cases. And while anti-scam technology has been in
place for many years, they are not 100 percent secure.
What a business can do from their side is look at the red flags to
determine a fraud chargeback claim.
▪ In case there is an abnormally high order value, around 10 to 20x
times the prices of an average order. It is common for fraudulent
actors to place a bulk order and then make a chargeback claim.
▪ If the user is deploying IP masking, it is very likely a case of
chargeback fraud.
▪ Different credit card and shipping addresses are also a red flag
that businesses can look out for.
▪ If the account user is newly registered with a relatively new
email address, it indicates a fraudulent chargeback claim.
Compose a compelling response
Once the business has determined whether the chargeback claim is
genuine or not, all left to do is to submit a response. In case of
fraud chargeback attempts, simply stating so would be enough to
quell any case against the
business. And not only would the claim be rejected, but the
fraudster would be notified to the relevant authorities for further
proceedings.
Now onto what to add in response to the chargeback claim.
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Now onto what to add in response to the chargeback claim.
For Product unacceptable chargebacks claims:
▪ In case the product is damaged during the shipping or is made of
poor quality, then it would be doubtful that the dispute would be
settled in the business’s favor.
▪ But in case the chargeback request has been made after the expiry
of the return policy, the business must attach the same in the
response.
For Products not received chargeback claims:
▪ Shipping is inarguably the biggest challenge faced by eCommerce
businesses. There is not much a business can do to fight such a
claim.
▪ Having a solid shipping and fulfillment policy can be helpful.
For Unrecognized chargebacks claims:
▪ Treat them as fraudulent chargeback claims and attach the bill
copy with the response.
▪ Opt for an appropriate transaction describer to prevent such
claims from resurfacing in the future
For Subscription billing chargebacks:
▪ These charges would often come as uncategorized.
▪ Attach the cancellation policy in response
▪ Copies of notification sent to the customer for renewal and the
transaction detail of the same.
Naturally, these are just some of the most common chargeback claims
and their appropriate responses. Businesses would need to attach
relevant documents with each of them and create a compelling case to
get the dispute settled in their favor. They also need to be mindful
of the dispute response period. Otherwise, the payment provider
would automatically settle the claim in the customer's favor.
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