Agree, it’s depressing when you get notifications that client have filed for chargebacks. It’s even more frustrating when clients do not contact you first so that you can somehow handle the situations. Dealing with chargebacks is quite a troublesome business. It takes a lot of time and incurs catastrophic losses. The good news is that there are methods of prevention. Learn how to avoid chargebacks by incorporating the tactics below into your strategy.
A Bit of Theory: What Are Chargebacks?
A credit card chargeback is what happens after a customer disputes his/her card payment and wins. You don’t get paid, and the payment is canceled. You will also be charged a chargeback fee.
The Fair Credit Billing Act of 1974 marked the beginning of the chargeback defense procedure. It offers advice on defending customers against fraud, including deceptive or aggressive billing tactics. Banks and payment service providers are required to abide by the investigative timelines and methods established by each individual credit card company.
This whole procedure is very expensive for the seller. According to statistics, sellers lose an average of $3.75 for every $1 lost to fraud. This is due to extra fees, increased overhead, and other losses, including reputation. That is why it’s best to prevent them. How? Let’s find out below.
Four Ways Your Brand Can Avoid Chargebacks
Sometimes the best solution for a business is to entrust all the work to the chargeback prevention service. Professional teams know for sure how to act to minimize chargebacks to zero. However, there are things that sellers can and even must do themselves to avoid chargebacks. Here are some of them.
#1. Keep Accurate Records of All Card Transactions
The finest proof for contesting chargebacks can be receipts and signatures. In the long term, keeping records of transactions might be beneficial, particularly if you have such tangible documents. However, it’s not always possible to obtain physical paperwork or signatures, due to the rising number of eCommerce-based transactions. In this situation, be sure to retain records or engage a technological solution that can do so, such as the IP address from which the transaction was made or the day and time the transaction was performed.
#2. Use Edgy Anti-Fraud Technologies
Visa and MasterCard developed authentication technologies like 3D Secure to improve card purchase security and shield businesses from chargeback liability. Instead, this authentication system shifts accountability from the retailer to the card issuer.
Moreover, by identifying high-risk transactions and enabling businesses to set unique rules, fraud protection technology can assist businesses in preventing chargeback fraud opportunities before they arise. Conflicts with fraud, in general, can be significantly decreased by having a reliable fraud protection partner.
Also, use multi-level payment protocols. Prevent checkout issues with a layered approach that leverages address verification services, email verification, chargeback prevention alerts, reverse phone number lookups, device fingerprints, speed limits for purchases, and card security codes (CVVs).
#3. Make Sure Your Return and Dispute Process Is Straightforward
Many customers file chargebacks with credit card companies, because it’s easier than contacting the seller. So, make it vice versa. Show them that it is better and more convenient to contact you first to add a layer of returns abuse protection.
Improve your return process:
- Add a transparent FAQ page: Review all returns and consult your customer care staff to build a list of frequently asked inquiries regarding your return procedure.
- Contact clients after delivery: Send a friendly emails or text messages after the purchases to confirm satisfaction, and ask customers if they have any questions or concerns.
- Optimize the return process: Use a system where customers can submit returns and track their progress online.
- Offer maximum communication formats: Provide 24/7 customer service with messaging, email, phone, and digital chatbots.
- Provide free return shipping: Even though shipping is expensive, chargeback fees can be even more wasteful.
- Handle negative reviews: Loyal customers are unlikely to want to issue chargebacks if they see that you are admitting mistakes and trying to improve.
- Ask for feedback after returning: Share customers’ feedback who have experienced your return process to encourage others to follow suit.
#4. Make the Description of Payments and the Name of the Seller Coherent
The customers may start a dispute if they don’t recognize the debit from their card. When they don’t recognize the name or recall making a transaction, this might make customers anxious and feel like their cards or IDs are stolen. Simply ensuring that the company name on the payment matches the company name that customers are familiar with would be great merchant protection from a chargeback. It’s a straightforward fix that, in the long term, can protect your company from major cost recovery problems.
Wrap Up – Avoid Chargebacks
eCommerce technologies are constantly evolving, and new chargeback threats are emerging daily. An effective chargeback management strategy must be flexible enough to identify new trends and practices, resist new technologies, and quickly adapt to ever-changing conditions. Hopefully, the methods mentioned above will help you to avoid chargebacks.
