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How to Manage Chargebacks for your Online Store

As a merchant, managing and preventing chargebacks is an ongoing process, and there are a number of reasons they might happen – shipments not received, billing errors, customer dissatisfaction, or fraud. In recent years, this has totaled a $40 million loss in revenue for eCommerce brands over the last few years, with fraud-related disputes accounting for the majority of funds lost.

To prevent and manage chargebacks for your online store, it’s important to first take a look at the categories they fall into, and why.

  • Shipments not received – If an item is delayed and a customer hasn’t yet received it, this might prompt them to cancel their order
  • Billing errors – If an incorrect amount is charged or a customer is billed twice
  • Customer dissatisfaction – If a customer is dissatisfied with the product they receive
  • Unrecognized purchases – If a customer doesn’t recognize the store name appearing on their card
  • Friendly fraud or identity theft – Friendly fraud, also known as cyber shoplifting, is when someone makes a purchase with their own identity (using their name, address, and card number) but then disputes the charge to avoid paying, or when someone claims identity theft

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Disputing Chargebacks

Different card brands have different regulations, which can make the dispute process lengthy. But pushing back can pay off. 77% of disputes that were classified as fraud were friendly fraud, meaning that not disputing them could increase your exposure to fraudulent activity. Although card companies define chargeback rules – for the customer and the merchant – they try to make it fair for both parties.

Pushing back on fraud chargebacks can also prompt card companies to look deeper into these kinds of disputes, sending a powerful message to banks. It can be a lot of upfront paperwork as a merchant, but in the end, it could benefit you. Time limits for when you can dispute chargebacks also vary depending on the card company, so be sure to keep that in mind.

Preventing Chargebacks

To prevent chargebacks the best thing you can do is be prepared. Here are some ways to prevent them as a merchant before they even happen.

  • Create legal policies and make them accessible on your website – think: your refund policy, terms of use, and shipping policy
  • Make sure your product descriptions are as transparent as possible
  • Use your store name as your billing statement text, that way customers can easily recognize it on their card statements
  • Send an email receipt immediately to the customer after a purchase is made
  • If a refund is requested, provide it as soon as possible
  • Respond promptly if a customer has an issue with their purchase
  • Provide accurate shipping dates and information
  • Ship a package as soon as the payment is received, and update your customer as soon as this happens
  • If shipping is delayed, be sure to let the customer know
  • If you offer a subscription service, be sure the customer knows that they will be billed regularly and when, and if they want to cancel this be sure to do this promptly and provide confirmation

You can also use a fraud protection tool like Signifyd to be notified of orders that don’t quite look right, right when they happen.

Signifyd’s Commerce Protection Platform comprises three distinct solutions — Revenue Protection, Abuse Prevention, and Payments Compliance. Together, they remove the stress from ecommerce fraud prevention, letting you focus on what’s most important, your business.

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Sources:

https://www.shopify.ca/enterprise/how-to-prevent-and-manage-chargebacks-as-a-merchant?utm_source=linkedin&utm_medium=social&utm_campaign=pluscm

https://midigator.com/chargeback-report-statistics/#last-years-report

https://www.chargebackgurus.com/blog/what-rights-do-merchants-have-in-credit-card-chargebacks#dispute

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