Chargebacks can be a major problem for e-commerce merchants. A chargeback is when a credit card provider demands the money back from a disputed or fraudulent transaction. When a cardholder files a dispute over the purchase, the merchant's account can be debited based on the amount of the transaction.
Chargebacks can happen for several reasons including an item was not received, the item in questions was very different from what was described, by the merchant, or the purchase was unauthorized. In addition, there is a growing trend by individuals to purchase expensive items, and then dispute the purchase in an attempt to try to keep the product without having to pay for it.
Chargebacks can be very costly for business owners as at the very least they lead to lost profit and costs related to restocking. Worst case scenario business owners can not only lose the sale but the expensive product they shipped if the customer claims they never received it or it is damaged in the process of trying to get it back. However, your business does not have to fall victim to available chargebacks. There are several strategies that companies can use to avoid and manage disputes to prevent chargebacks.
Provide Accurate Contact Information: It is less likely that a customer will initiate a chargeback if they can reach you directly and work out the issue. You should always provide ann email and phone number where customers can reach you. In addition, being proactive and calling a new customer after an expensive product is purchased can lead to less chargebacks and even help you identify fraudulent purchases.
Respond Quickly: Make sure you respond to customer professionally and as soon as possible. Customers that feel like they are waiting too long for an answer after contacting you may be quick to initiate a chargeback.
Have a clear return policy: Make sure you have a return policy that is easy prominent on your website and it clear.
Give realistic delivery dates and provide tracking numbers: Customers may initiate a chargeback if they haven't received an item by the estimation date they were given or if they do not receive a tracking number and therefore do not know if the item was ever shipped.
Chargebacks can be costly and frustrating for business owner especially when they are preventable. When you accept credit cards there is always a risk a customer may initiate a change back especially when accepting online credit cards
However, just because a customer initiates a chargeback does not mean you have no recourse. You can bring your case to your bank or payment processor if you believe that a chargeback was unfairly brought forward.