Chargebacks how to handle it?

15 replies
Hi guys,

let me itroduce this story for awhile... i have a Social Media Promotions services business working for about 7-8 months. I work like many of you guys with a nice website aggregated a well known payment processor, in this case Paypal, but could be another one for this matter.

Today i received an e-mail from paypal telling me that a customer had requested a chargeback from his bank, the transaction is from 1st July 2012, i have delivered his service at the time but today the guy did this to me, well the issue is not getting this from scammers since this business goes very well, but my issue here is the following:

about paypal and chargebacks, the seller has protection for tangible goods, so i am not eligible since a service is considered a virtual "product".

But what matters to me is that people start to order services and few weeks, months later (after receiving the service) will start to ask for chargebacks.

My question is , what can we do about it (lets say that you are a webdesigner a SEO consultant, etc) so i believe that services are at stake here so people without respect to scam us by this way.

I know asking for checks or wire transfers are options but will decrease the conversions very much.

I was thinking in a workaround that i do not know if it works but for future customers i will do it from a certain order values.

In case of paypal they will require a copy of the shipment, so i am thinking to send an invoice by mail acordingly with paypal rules, so when this occur i will have the proof of shipment. Its an extra cost but at least will have some facts to comprove that i have shipped the invoice and the customers will receive a tangible "thing".

What i really think is that banks should have a way to control the services that are paid by credit card should have a similar treatment. Well in 7-8 months i only had 1 chargeback so its not a big deal, but this worried me, because if a Big customer start to think to work like this, then i will start to have issues.

What do you guys think about this.

Thanks,
Morg
#chargebacks #handle
  • Profile picture of the author Steven Wagenheim
    There is really nothing you can do about chargebacks. Even the payment
    processor can't do anything about them. If a customer goes to their bank
    and asks them to reverse the payment, it's done.

    However, what you CAN do is offer quality products and services to REDUCE
    the number of chargebacks you get.

    In 9 years of marketing online, I think I've received 5 chargebacks, if that.
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    • Profile picture of the author ryanmilligan
      Banned
      Originally Posted by Steven Wagenheim View Post

      There is really nothing you can do about chargebacks. Even the payment
      processor can't do anything about them. If a customer goes to their bank
      and asks them to reverse the payment, it's done.

      However, what you CAN do is offer quality products and services to REDUCE
      the number of chargebacks you get.

      In 9 years of marketing online, I think I've received 5 chargebacks, if that.
      Steve has got it right there - there is nothing you can do to directly stop chargebacks.

      But like mentioned, offering quality products/services you could potenially stop the number of chargebacks associated with your business.
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    • Profile picture of the author Tweetter Follow
      Originally Posted by Steven Wagenheim View Post

      There is really nothing you can do about chargebacks. Even the payment
      processor can't do anything about them. If a customer goes to their bank
      and asks them to reverse the payment, it's done.

      I agree. There is not much that can be done.

      What I'm not very clear on is, I believe Paypal protects sellers as that is what I was told by one of the paypal representatives in a similar case I had a few weeks ago.

      Buyer requested a chargeback and claimed I hadn't delivered the product. I've provided evidence (emails, screenshots etc) to paypal and they took the chargeback down not long after that.

      What you need is, provide enough solid evidence that the service or a product was delivered and always keep the emails and conversations between you and the client so in case something like this happens, you have proof.

      Best of luck to you in the future.
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  • Profile picture of the author WeavingThoughts
    If he asks for a Paypal refund then Paypal usually doesn't refund if the client just questions the quality of a virtual product. But if it is unauthorized activity etc proven via proxies then nothing can be done. And in case of a chargeback by a bank or credit card, all you can do is sue legally.

    For big transactions, it makes more sense to take money via wire transfer or other methods where he can't ask for a refund.
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    • Profile picture of the author morg2k2
      Sure,

      I understand what you are saying, a good quality will improve sales and decrease chargeback ratios, but the main issue i believe will be scammers or people that will require your services without paying for it, scamers exist everywhere, so in my case i can sell small services as low as $15 to $9000 and beeing chargedback for 9k will lead me to anihilate my business.

      Normally i try to give a Premium support to all my customers so i never had this issue, but what worries me is this hole that can destroy any business if scammers will follow that road.
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  • Profile picture of the author maxaurelius
    Chargebacks is all part of selling products unfortunately. The only thing you can do is try to get feedback from those customers that chargedback, so your bettet aware of what may have lacked in your product.

    What you have to learn to do is to minimize the percentage.
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  • Profile picture of the author WeavingThoughts
    More often than not chargebacks are from scammers. For a genuine client you refund on your own. They rarely stoop this low.
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    • Profile picture of the author morg2k2
      Originally Posted by WeavingThoughts View Post

      More often than not chargebacks are from scammers. For a genuine client you refund on your own. They rarely stoop this low.
      This one was real weird, 3 months ago we have promoted a video and finished very quickly with very good results. So a very satisfied client. 3 months afterwards this guy request a chargeback without messaging me or add a claim in resolution center.

      Maybe he went out of cash.... and slammed me i will see if i have e-mail from that time so i can send to paypal. if not i will support the chargeback.
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  • Profile picture of the author Raydal
    It's always tough when you get a chargeback but worst
    when it is for a SERVICE you have already performed
    because you can't get back your time and effort.

    That's why you must know how much refund you
    can absorb and accept payment in nonrefundable
    avenues such as checks and wire transfer accordingly.

    That's why I place a limit on the amount of money
    I would accept through Paypal or a credit card.
    For higher fees I use wire transfer or business
    check. It's just safer.

    -Ray Edwards
    Signature
    The most powerful and concentrated copywriting training online today bar none! Autoresponder Writing Email SECRETS
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  • Profile picture of the author kencalhn
    I've had less than a dozen chargebacks in over a decade online. I just had one, the first in years, recently, from a scammer who had provided a false phone number, and the order IP didn't match from their cc bill address, in checking it after the fact.

    They ordered an online course (cost was >$500), then shared the password online (my security script geotracked logins from china, brazil, and two locations in the US before auto-shutting down access at 5 unique IPs, as I'd configured it). Then charged back the entire course fee just several weeks after ordering, without contacting me. (and the chargeback said the reason was 'they didn't order it').

    Anyways this type of thing is credit card fraud, and I treat it as such, and I contact the police. Step 1 is I use a geolocation IP tracker (google "geolocation IP lookup") to find out, from the order IP address, where the order was actually placed. Then I contact the police 'cybercrimes' unit in whatever major city is closest to the actual geoIP login address, to report this, and email them screencaps of the IP address tracking and other support documentation, so they can investigate and pursue criminal charges against the scammer. If it was a compromised .cc number that a scammer used, the police can investigate that. Or if it was a customer that falsely claimed they didn't order it, and their IP address matches up (police check w/ISPs to verify IP location vs order location), then that's grounds for .cc fraud charges; the LEOs will forward to PAs office for prosecution. Though it can take a long time.

    I have a zero tolerance policy towards pirates and scammers and routinely work with law enforcement to report these for criminal and/or civil prosecution. That's why I have very very few incidences of this (on a related note, I even have pirate forum domain names de-registered by sending DMCAs to registrars, and payment processors). It's important to have teeth and balls.

    ps good point Raydal re for high ticket services for unknown clients, I'd always get 1/2 upfront via money order/bank check so people (esp. in other countries) can't rip you off, that's smart, or at least some kind of escrow service.

    Good merchants with quality products will have very few chargebacks if any; eg of thousands of transactions I've had less than a dozen in 10+ years; so that's something the merchant cc processor looks at (as will paypal and other payment processors, as they should). If however someone has a lot of chargebacks from many customers, then they may just be a bad merchant, or offering bad content.
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  • If you stay in good contact with your customers and make YOURSELF as a source of contact for all their troubleshooting you wont get many charge-backs if any.

    Make sure they KNOW they can reach you at any time for a refund.
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    • Profile picture of the author noangel
      Originally Posted by TheSalesTechnician View Post

      If you stay in good contact with your customers and make YOURSELF as a source of contact for all their troubleshooting you wont get many charge-backs if any.

      Make sure they KNOW they can reach you at any time for a refund.
      ---/---

      Unfortunately, though I wish it were that simple, I have sadly found
      that is not always the case.

      All our products come with a No Questions Asked Money Back Guarantee.

      We state that clearly on the product, on the download and on the
      Thank You page. I even have a message on my Paypal account that
      states my email address to ask for a refund if they are unhappy for
      any reason whatsoever...

      Does this stop the few from filing unauthorised claims and Chargebacks?
      No it does not.

      When I call Paypal and ask them if there is anything I can do better,
      I generally get the same response... They say they can see all the
      measures I have put in place and I was told... "If you could see me,
      you would see I am shaking my head in disbelief".

      It is very upsetting when you try to provide a quality product and you
      realise it may not be for everyone, but all you ask if someone is not
      happy, is for them to request a refund, and they don't.

      I think they opt for the "unauthorised" route thinking this is the best
      course of action to take when a product is digital. They obviously don't
      have to substantiate anything, because in the case of a WSO they would
      have had to log into a secure site first where their IP address was
      recorded before making the purchase.

      Do the Banks really buy the claim that someone effectively stole their
      card and unbeknownst to them placed a purchase of a whopping $20-$40
      on the card! Guess so.

      I have emailed some people who have done this, explaining that I am
      happy to refund if they ask for it and apologising that they weren't
      fully satisfied and have tried to reason with them that waiting for their
      Bank to investigate will take weeks, whereas I will refund them immediately.
      Not one of them ever responded.

      Luckily though, they are a very small minority.

      Kind regards,
      Angela
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  • Profile picture of the author contentwriting360
    Banned
    As some of our fellow Warriors have said, there's not much (or really nothing) we can do when it comes to these chargebacks. What we can only control is the quality of service we offer our clients. True, there will be scammers. The chance of being scammed is lessened if we ensure top-notch services all the time.
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  • Profile picture of the author ahlexis
    Is it possible that someone such as an accountant is reviewing the books of this business? If so, they may have asked the client what it was for and the client might not recall that service you provided was billed under the name on the credit card. So it's possible that since they've forgotten how they were billed and why the name is on their card billing statement, that they have now done this thinking that your charge was the fraudulent one.

    If they have in fact ordered the services and were happy with the work, this can also be considered theft by deception (you thought you were paid, but they have actually stolen your work because of their revoking of the payment to you). Theft by deception is a crime.

    Have you contacted the customer since receiving the chargeback notice? It's possible that they have forgotten how it was going to show up on their credit card. If that is the case, then once you remind them they can approach Paypal or their bank and say "Oops, made a mistake!" and get the reversal canceled.

    Sometimes people make mistakes, so calm communication is the key to clearing up any misunderstandings.
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  • Profile picture of the author PaymentMaven
    Lotta guys made good comments to deal with chargebacks. I see this everyday. Visa/Mastercard and providers generally go by a rule-of-thumb of 1% of sales for chargebacks. This will raise an electronic red flag. Depending on your provider, you may be shut down immediately until the risk department investigates.

    I always recommend giving a refund...even though you feel ripped off.

    Always keep a paper trail of what was delivered and when. Call the client when you can. However, if the buyer is a crook, then, I agree, contact the police.

    You can take a look at my report for additional suggestions.
    Payment Maven Merchant Account Credit Card Processing-Can You List 21 Ways to Prevent Credit Card Sales Fraud

    Feel free to PM me if you want to talk.

    Cheers,
    Paul in Los Angeles
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