Tips to Reduce Chargebacks

We continue to get questions about chargebacks from visitors that appear to be having a very large problem with them.  We want to provide you some simple tips that may be able to assist you with reducing the amount of chargebacks against your, or at least help you fight and win the chargeback settlement.  It can be hard for small retailers to keep up with chargebacks and fight them fairly because they do not keep up with the information that they need.  Here are some tips to help your company reduce the unwelcomed chargeback.

1. Make sure your policies are stated for everyone to see throughout the checkout process on your website.  Most retailers should prominently display their Shipping, Returns, Privacy, Payment, etc. policies wherever a potential customer will be visiting during the buying process.  With these in place, it will help you in the fight when a chargeback occurs.  It makes it easy to show the credit card company that your policies where there and hard to pass by.
2. Integrate your shopping cart with a fraud detection software module.  These are becoming very popular because the third party company is able to screen your customers when they checkout to reduce the risk of getting a chargeback due to fraud.  This is the number one reason for a chargeback.  Some good services are Verifi and Avangate.
3. Place your Business Name and Phone Number on the customers statements that they get from their credit card company.  This can be done when you sign up for credit card processing services or with your existing credit card processor.  This is an easy and effective way to reduce chargebacks.  This allows the customer to call you up if you have charged their card without their knowledge, which happens in most fraud situations.  If they have a chance to call you, then you can fix the problem before a chargeback is issued.
4. Setup your credit card processor to authorize the full amount of the sale when it occurs.  It tends to be better this way because then you know that there is that amount on the card for when you have to capture it.  A good rule is to try and authorize the sale when it occurs and then capture the funds when you ship the product.  Most credit card processors allow you to either Authorize and Capture immediately, or Authorize and then capture at a later time.  If you are an online retailer, it would be smart to use the Authorize and then capture method.  This reduces your chances for immediate refunds when a fraud order somes through as well as customers that do not get their items shipped on time and they would like to cancel.  It is the cleanest, most efficient method for processing credit cards on your site.
5. One of the easiest things to do is to verify orders over a certain amount to make sure that the customer is actually the one who is purchasing the product.  This can be a very simple call to the customer for verification.  If the number is disconnected or wrong, then it should send up a red flag and you should hold the order until you can get a definite answer.  Most people committing fraud do not leave a correct number in order for them to be reached, so this is a great way to weed out the fraud.
6. A tip that we have learned is to look at the customers email address that they use to checkout with.  There have been many instances where the email address will tip you off into investigating the order a little more.  A good majority of customers actually use their name in some fashion in their email address.  People committing fraud try to mimic this, but then to put a name that doesn’t even match the customers and it always comes from a free email service like yahoo or hotmail.  These email extensions can sometimes be a automatic flag in our fraud software.
7. Many retailers have started making customers have any address that is different from the billing address be placed on the credit card.  This is an easy process for the customer to do by just calling up their bank and adding alternate addresses.  This allows you to check with the bank to see if that alternate shipping address is a real one.  You can display this during checkout to let your customers know that they need to add any different address to their credit card.
8. There is a trend in online retailing where retailers are now requiring a signature confirmation on all packages that they ship.  Signature Confirmations are a service most readily available through UPS and Fedex.  While this can frustrate some customers, it makes others very happy because they know that they will get their stuff and it will not be sitting on the front porch with the possibility of getting stolen.  If you let your customers know this ahead of time, then they can choose a work address or an address where someone is available so sign for the package.
9. Last, but not least, make sure that you keep all documentation of the order and any correspondence that you have with the customer.  Having a paper trail is the best and most effective way to fight chargebacks.  Keep the original receipt, when you charged the card, when the item was shipped, when the item was delivered, if it was signed for, the signature of the person signing for it, the address it was shipped to, any emails that the customer contacted you, and so forth.  Having all this information makes it hard for any unwarranted chargebacks to succeed.

There are many people out there that try to not pay for their purchases, or say that you never delivered the goods, or it was different than what they thought.  There are also some that are just trying to commit fraud.  You as a retailer have to protect yourself against these individuals to make sure that you don’t lose any money for no good reason.  Chargebacks are going to happen, so keep these tips in mind when you are running your business and see if you can strengthen your defenses and keep the money that you have worked hard for.

Related Posts:

• Fight Against Unwarranted Chargebacks
• Know your Bad Customers