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Old 03-19-2010, 10:28 PM
Spartadata.com Spartadata.com is offline
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Post Chargebacks and how to Fight them
I am posting this a my original contribution from my blog as aid to merchants and businesses looking to better protect themselves.

Now a days chargebacks are what business owners know as lost revenue plus a hefty chargeback fee imposed by the merchant provider and banks. There are two reasons why charge backs commonly occur. First is the Unauthorized transaction type which is the hardest to dispute however it can be and the second type is the unrecognizable transactions most customers may attempt to get away from by complaining to their bank directly. A typical case would go like this. I as the customer purchase a product from a merchant. I then wait a few days and review my statement. I notice a charge from something that is not too clear in the statement, perhaps I did purchase whatever the name of the company it is showing on there however I have reason to think it is not one of the places I can identify as having done business with... So on a bank visit I decide to dispute the charge on my account because I do not recall of it. The bank provides X amount of time for disputes to be filed against any transaction. The law states 6 months. Anyhow the bank in this case protects and upholds the bank account holders word and files the dispute with the merchant electronically and via letter. Within 24 hours the merchant is deducted the full amount of that particular transaction plus whatever fees his processor imposes which in return the processor gets fined as well by the bank. It is a cycle in which at the end money gets put back to the customers bank account as if that particular transaction never happened. Note that banks try not to abuse this process by allowing the same account holder to do this regularly however there is no agency looking at this in particular. Banks usually have a threshold of how many incident an account holder can file before the Bank takes notice of a pattern. Now that the merchant is down negative on that sale he/she can begin the process of disputing and attempt to recover this sale. The best practice is to always store and keep a copy of each transaction receipt. The bank/processor will only validate a dispute based on an actual signed transaction receipt. So this this case providing a copy of one may reverse the negative sale and fees imposed by the initial dispute. The merchant has usually 30 days to file the chargeback dispute. If the client goes back and tries again to recover this sale as unknown the bank may choose not to proceed a second go or if they do the processor may involve the credit card company VISA or MASTERCARD in which whatever they decide will be the final outcome of that chargeback case. This would be the extreme case. The majority of the time the matter gets resolved on the merchant response to the chargeback given they have authentic receipt data to showcase as proof of sale. Long story short use the signature capture feature that is built exclusively to our Billing app as you can always go back into the history and resend a receipt complete with signature via email for your records. Another tip is to always cc yourself as the merchant when emailing receipts to customers this way you can easily look for the date and time via email should any chargeback come knocking. I also wanted to point out that if the customer files an unauthorized transaction claim with the bank these can be harder to combat - in this case the bank considers this as a fraudulent transaction in which one can assume would be that the customer lost his/her card and someone else used it. Again a signed receipt will be the best protection a merchant will have in order to reverse the action imposed by the customers bank. I welcome feedback and cases where merchants have encountered issues when disputing such maters and what they did to overcome them. This is a large topic and has a lot more areas I am not yet covering however I hope this helps open the dialog on this critical subject matter that effects everyone that accepts credit card payments.
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Old 03-20-2010, 07:16 PM
supershine supershine is offline
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Hi Sparta,

Its me again. Just want t say another thank you for this charge back's issue and how we can prevent it from happening. You are really good in giving solutions. Your the best !!
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Old 03-24-2010, 05:49 PM
saramedows saramedows is offline
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Thanks for good ideas and guidance regarding chargeback issues, it is probably everyone faced by making a little bit mistake
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Old 07-29-2010, 07:32 PM
freeelancerr freeelancerr is offline
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some chargebacks can be prevented through 3d secure but most can't....
go offshore and try to get a merchant account with a tollerance to chargebacks.
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Old 07-30-2010, 09:07 PM
lunarapoc lunarapoc is offline
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This is excellent information Sparta. I wish I would have been better informed when I had to deal with a chargeback last month and lost.
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Old 01-04-2011, 12:28 PM
lqzkill lqzkill is offline
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I also want to know
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Old 07-18-2011, 03:04 PM
statementsupp statementsupp is offline
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good info thanks
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Old 08-03-2011, 08:37 AM
maintainie maintainie is offline
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That's what I want to know about.Just thanks.
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Old 08-11-2011, 11:43 PM
lightingguru lightingguru is offline
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with my website we have never had a true chargeback. We have had customers that have claimed that they have not recieved the merchandise but oddly they signed for it with ups or fedex. making people sign for packages has saved our bacon a few times.
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Old 07-17-2012, 09:30 AM
chrislim2888 chrislim2888 is offline
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implement a credit card fraud prevention, it could help to reduce the chargeback. for example: fraudlabs.
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