How Do/Would You Hande Chargebacks for Reps/Affiliates Pay?

"On the other hand, it'd only take one bad apple who does a dozen "false" sales in a row to throw me to the curb."

A verification process, after the sale / before the charge,
by some one other then, the rep who sold it.

We record ours.

You will have a percentage of them "kick", but its better
that they do it before the charge, then after.

When we do ours, we make sure its 100% clear on the amount,
and what they are getting.

Its helps a lot with charge backs.

A warm and fuzzy, thanking them for the business and letting them know you have actually started for them, within the 1st wk of the sale
also helps.

This is just one of the pro active ways to handle chargebacks.

You guys have it nailed! Why didn't I think of that is beyond me, as I had planned to follow up on every sale in the beginning - though I don't plan to do that forever in the future.

To verify that everything was clear and manage expectations, as quality control for the reps and client service, to help setup the products, to build relationship between the clients and me or the company other then the rep, and yes, to watch for more opportunities.

I realize though that "dedicated fraud artists" can still get me, but especially in the product setup they can be probably sniffed out.

But even in that case, do you pay 100%? I mean chargebacks do happen once in a while, and reps turnaround can be quite high, so I imagine planning for that can still be worth it.

In a way it's better to have 5 guys owe you money while having other reps made twice the sale than if a system had prevented those 5 guys but overall there were less sales...

Nice tips there. I'm the one who'll handle the chargebacks in the beginning.

I'll have a quota on chargebacks, not on sales, as I pay commission based only, but high commissions + a chance to make residual income if the volume of sales is high. So more carrot and less stick as there's no base salary. For appointment setters I do plan to pay hourly+bonus and have quotas, but not for reps.

If they want to make big money though, the reps will have incentives to go all out. I'd rather have 2-3 top producers and 15 part-timers (or so called full timers producing as such) than just 4-5 reps overall.

As for frauds, I don't "fear" fraudulent reps that much, but I'm wary of fraudulent "referrers" or what you might label affiliates. Hopefully when I do run on one my cahsflow will be strong and established.

With quality control, I should keep the chargebacks low anyhow. Thanks

Jay are these contractors or employees?

Employees it is hard to pay pur commission unless you have a draw system in place as you have to still pay minimum wage in some form. Talk to a payroll specialist and/or lawyer on this.

Also you will not get the best sales people if you pay pure commission and hear me out on why. Unless you are a big company or a known product as a sales person when I see commission only it raises a red flag. That flag being you don't believe in your product. If you believe in your product and that it is going to sell well with good sales people you always have a base or a short term(month or two) minimum pay set up.

Yes a lot of places will do like said above and have quotas from day one. And they will have a lot of turn over as well. Many call centers have a load of turn over for this reason. And depending on how you want to run your business maybe high turnover is good.

Myself I would rather have zero turnover because I hired the best from the start. Of course the question is can your business model afford the best? Do you know how to hire the best? These are questions that you have to answer. BTW the sales guy motivated 100% by money will never be the best. You need to get the guy who does it for his ego. The money is just icing. The money guy will get comfortable. he will cut corners. The ego guy will always be out to best himself. You get two or more of these ego guys into a single sales office and you can watch sales sky rocket. You can have contests. But the rewards don't need to be money. In fact a physical award like a sign, banner, or etc is going to drive these types more. Of course you have to be careful if one becomes dominate you can lose the others as they want to be number one. They like fighting to be number one but if John is number one every week and every month you won't keep the others as this will burn them out unless they are close every week.

Honestly I can tell you in my years of management I hated hiring those motivated by money because they never work out in the long run. I never gave out money awards unless I was forced to by upper management. And time and time again my stores would be the best in the district, region, and soemtimes even the whole company. I paid my people right but I got the people who were motivated by being the best. They loved the fact we blew the other stores away. The energy feed into it and they just got better and better because of it. You create an environment where people as individuals and as a team are driven to be the best.

The other great thing about people not motivated by money is especially early in their careeer you can get away with paying them less. They simply don't know what they are worth. Once they figure it out though be ready to pay them more if you want to keep them.

Remember this rule of thumb as a sales manager your best sales people(top 1 to 3) should be making more than you.

Whoever told you chargebacks can be issued within 60 days and no longer, is a liar. Depending on the bank or credit card issuer, a chargeback can be issued 11 months later. It has happened to me before, and many others. Most banks have a 6 month policy, or 180 days, but there are some that allow for it up to a year like American Express, and some pretty well known banks.

I don't think it is LEGAL for you to hold their commissions.

Offer a discount if they pay with a check, or follow up with exceptional customer service and get a REAL merchant account. Even if you have a signed contract and the work was completed, you can and will still lose a majority of chargebacks if you're with paypal. If you are with a real merchant account, you can specify your refund policy. I would recommend doing a 15 day refund policy or a 30 day refund policy with the stipulation of the work not being started. It works for me.

I have been myself a pure commission based rep at one time so I don't fully agree with that. Financial services of all kind, real estate agents, etc. are mostly 100% commission work. Of course they are in established fields and usually in big companies as well, both luxuries most of us here don't have but I can't print money of thin air anyhow nor pretend to.

I personally find that sales reps looking for base pay are not the ones I want to attract, as then you need to supervise their butts constantly, put quotas in place, etc. I'd rather have reps with autonomy, and incentives. 10 part-timers can produce as 2 full timers, and make these 2 full timers feel like the stars they are.


Who wouldn't want the best reps from the start and no turnovers? But that's like saying I only want high paying, intelligent, no PITA customers from the start. Hey, it can happen but don't bet the farm on it.

The thing is, I simply KNOW reps, even the good ones, move from one project to the next quite often, much like us entrepreneurs with ADD. Turnover is a part of the game. Of course I'll do my best to reduce that but it will happen. It doesn't faze me much cause hiring, training and motivating reps is something I find easier to do than actually doing most of the sales myself.

"Rejection" from sales reps is much more to my liking than rejection from prospects. I see it time and again on the WF how it bothers people to "lose" reps and have to start the hiring process over again. I only see that as a normal part of running a business, much like prospecting for clients is an on-going thing.


That is 100% correct!!! No doubt about that one.

Oh yes it is. Just ask a life insurance agent. Chargebacks in that industry are very high, 10% is even considered a good score, and agents have to learn to deal with it.

And no company would hold the majority of commissions credited if they want to keep reps! But a small % is common place. Heck, just look at what Clickbank does!


Are you saying that if we have such a policy in place, then the banks and credit card companies will respect it? That'd be nice!

You information on chargebacks and Cancellations is a little bit inaccurate.

The difference lies wherein whether you have your own Merchant Account or if you are using (GULP)PAYPAL...

With PayPal, you....as the Merchant have virtually no rights...and those chargebacks PayPal "claims" to fight on your behalf? they don't...period.

With a Real Merchant Account the Processor gives you the opportunity to present evidence in your defense.

The Processor will tell you the Reason for the chargeback. The most common is "Unauthorized Transaction/Fraud" followed by "Cancelled but not Refunded)

You can protect yourself in both of these areas.

1st, Always have the Merchant sign a Credit Card authorization form for in person Sales and if possible, for Phone Sales. Swipe the card if at all possible (Square or others)

2nd, Clearly post a "No Cancellation/Refund" Policy (Or whatever Policy you wish to adopt) on your Website at the point of checkout. Make them click approval to complete the transaction.

In each case you know how something to fight back with...so long as you arent using (Gulp again!) PayPal!