5 Proven Tips To Avoid Chargebacks And Fraud

A chargeback is simply the reversal of a payment via a credit card that comes directly from the bank.

From a merchant’s perspective, a chargeback is a potential threat to their business especially when some consumers take advantage of this to execute fraudulent activities. From the consumer’s point of view, a chargeback may seem like a protective barrier against possible dishonest merchants, the truth is chargebacks were never really intended to work that way.

The purpose of a chargeback is relatively similar to the traditional way of refunding. The only difference between the two is in a regular type of refund, consumers directly contact the business to get a reimbursement.

Meanwhile, in a chargeback, the consumer asks the bank to forcibly take back the money from the merchant’s or business’ account. This is followed by investigations that are operated under a legal framework.

Finally, if the bank decides that the cardholder’s request is valid, the money is taken back from the merchant and returned to the cardholder’s account.

The following are the common reasons why customers demand a chargeback:

• The item is not delivered.
• Quality of items or services are below standard
• Billing errors

However, not all customers who request a chargeback are real customers who have availed the merchant’s products or services. In some instances, scammers pretend to be customers and demand a chargeback to get easy money.

As a merchant, it is indeed difficult to avoid a chargeback because of the possibility of uncontrolled factors preventing the smooth delivery of the service or product that a customer decides to purchase. In addition, fraudsters/scammers are still rampant nowadays. 

That said, although chargebacks tend to be inevitable, there are still ways on how merchants can minimize it:

Below is a list of reliable ways that will help online sellers or merchants eliminate potential instances of a chargeback.

1. Always Practice Honesty

“Do unto others as you would have them do unto you.”

Keep in mind that customers will not treat businesses and merchants amicably if they know and learn that they are being taken advantage of. Make it a point to provide realistic details about the items and services offered.

Avoid making promises or giving out unrealistic expectations beyond the item or service’s limitations. A customer will become eager to demand a cashback once their expectations on the item are not met or if they feel that they have been deceived through their purchase.

It is also advisable, albeit a bit rude, to blacklist customers that have demanded chargebacks. Keeping track of which customers have asked for chargebacks and for what specific reasons or under what particular circumstances help zone in on probable scammers

who filed disputes and will more like take advantage of the business or merchant again when the chance arrives. Use the list as a preventive measure to avoid any further abuse from fraudsters.

2. Enumerate & Explain Transaction Details Clearly

Many chargebacks often take place when the details provided during and after a transaction are unclear. Clarify whether the item needs to be pre-ordered or shipped overseas and that payment is required first to acquire the desired item. If not, list down payment options that customers can choose from.

Can they pay using their credit cards? What other types of payment methods are accepted? Is cash on delivery also an option? Will the customer be charged with the shipping fee? If so, how much will it cost?

Customers tend to demand a chargeback whenever they discover unexplained charges in their purchase. Always provide the business name in the transaction details so that customers can easily identify the origin of the charges when they review their bank statements.

In addition to the transaction details, merchants must always make it a habit to provide consistent updates on the progress of each customer’s purchase. Keep them updated on whether the item has been shipped or not.

Provide them an exact estimate of the length of time customers need to wait before their item is delivered. At the same time, always let customers know whether their payment was successfully transferred or not. This way, any possible dispute, system malfunction and/or odd purchasing behavior can be detected and acted upon early on.

3. Provide Round-The-Clock Customer Service

Whenever customers hate slow customer service, especially whenever they encounter problems during their purchase. If a support representative is not readily available, customers tend to reach out directly to the bank instead.

Enabling more than one mode of communication for customer support helps maximize the assistance that the business can provide to its buyers or customers. Once a customer’s queries about their transaction are adequately answered and explained, then they are less likely to demand a chargeback.

4. Always Be Efficient

Aside from providing quick, accessible and reliable customer support at all times, meeting customer expectations in all aspects of the service should be the priority of every business and merchant. After all, nothing beats efficient service.

Always deliver the customer’s desired goods and services on time and notify the customers as often as possible regarding the shipment of the product purchased. Be clear and concise about product and transaction details.

Enumerate all possible payment methods that customers can use and explain each condition needed to be met (if any) for each transaction and payment method chosen. Aside from avoiding a chargeback, this can also significantly boost your customer’s loyalty.

5. Suggest Choices For The Best Payment Solution Provider

Giving customers a flexible way to settle their bills or pay for their purchase is a plus point. Laying out the customers’ options helps make the service more efficient while providing customers the assurance of fast, secure and transparent transactions.

Business owners know very well that chargebacks are usually difficult to foresee. Still, that doesn’t mean that it cannot be prevented. The best way to counter instances of chargebacks and block scammers from attempting to extort money from both customers and the merchant is to practice efficiency and transparency in all aspects of the transaction.

Setbacks may, at times, be unavoidable, but a commitment to honest and dependable service will always go a long way.