Charge Backs how do you deal with them?

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So lately I have had 3 charge backs and is down right painfully.

I had a guy do a charge back despite me telling him I have refunded and showed him proof that his refund is on its way and that he should check with his bank.

He still did a charge back, but I won the dispute. However, my merchant account ( Merchant Warehouse) still charged me $25.00 each for both transactions, so that is $50 even though I won the dispute.

Now I have another charge back claim from someone claiming they never received the product, and they never contacted me directly to tell me that they never received it. I can't prove that they received, all I have is a tracking#, no signed signature.

Does it make sense to require a signed signature for every delivery, isn't that an inconvenience for customers? Because it will not be dropped if in the mailbox if the customer is not around, and the customer would have to go to the post office to pick it up.

Also, how do you guys handle charge backs? Does your merchant processor charge you a fee like mine does?
#backs #charge #deal
  • Profile picture of the author york
    Go exclusively with google checkout, get signatures on all your deliveries. Google will fight the chargeback, and even reimburse you for any losses incurred, if you get signatures, and provide proof of shipping, and respond to inquiries in a timely manner.

    Google checkout employs a very strong set of tests against credit card users that virtually eliminates fraudsters from being able to place an order with you in the first place, and also unlike other merchant gateways, they do this for free and dont charge you extra.

    In ecommerce you have to protect your bottom line, by eliminating as many costs as possible, for instance, having to pay extra for fraud protection, having to pay for dropship support on a monthly basis, having to pay for shopping cart software, and support on a monthly basis.

    You want to go: free fraud protection, one-time cost for drop ship management software, free shopping cart, and free sales channels, like thefind and bing.

    P.S. i also used the merchant warehouse before and they burned me on a couple chargebacks as well.

    Hope this helps!
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  • Profile picture of the author Traffic Inc
    Always always send your items with a service that has tracking / requires a signiture. Simple

    That way you have evidence that the customer has received there item(s) and if you do have a chargeback for the same reason in the future, you have a means of proving delivery. Without proof of delivery you will continue to lose the cases of non-receipt from your merchant. It will also avoid chargebacks in the first place, specially if your selling mid to high value items.

    I would imagine all mechant providers will charge a fee on a chargeback. Its a simple way to make extra money.
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    • Profile picture of the author CynthiaAngel
      Originally Posted by Traffic Inc View Post

      Always always send your items with a service that has tracking / requires a signature. Simple

      That way you have evidence that the customer has received there item(s) and if you do have a charge back for the same reason in the future, you have a means of proving delivery. Without proof of delivery you will continue to lose the cases of non-receipt from your merchant. It will also avoid charge backs in the first place, specially if your selling mid to high value items.

      I would imagine all merchant providers will charge a fee on a charge back. Its a simple way to make extra money.
      Thanks, I guess my thinking with signature requirements is that it inconveniences the customer because if they are not around, then the product will not be dropped off and they would have to take time out of their day to pick up the product at the post office.

      Am I thinking about their inconveniences too much?
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      • Profile picture of the author Traffic Inc
        Originally Posted by CynthiaAngel View Post

        Thanks, I guess my thinking with signature requirements is that it inconveniences the customer because if they are not around, then the product will not be dropped off and they would have to take time out of their day to pick up the product at the post office.

        Am I thinking about their inconveniences too much?

        Yes, you need to cover yourself better otherwise those chargebacks will continue to come.

        What you are describing is very common on ebay / amazon marketplace. When I used to sell, i would make sure everything was tracked & signed. Even if I had to pay out of pocket for the convenience and peace of mind. I tell you...you will also sleep better without having to deal or worry about this rubbish.

        Also note that too many chargebacks on your merchant account and they could cut you off! When you look for another merchant account, this chargeback history could also present a problem. Good luck!
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  • Profile picture of the author winsoar
    If you are sending physical products a signature on delivery is vital in my experience. However, by the sound of it, it seems like you need to change your merchant account provider. Their fees are expensive!
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  • Profile picture of the author James.N
    I would also recommend using MaxMind at your checkout process. This will help to filter out some scammers and fraudulent people. This has really help to keep the riff raff from even paying in the first place.
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  • Profile picture of the author Silas Hart
    Even if you are a large seller, you Have to fight chargebacks. Like someone else here said, chargebacks are something a merchant uses to determine your level of risk. If you ever feel like you've had a lot of chargebacks recently, you can make an agreement with your merchant to put $500 or $1000 in an account to be held (I put 1.2% of all transactions into an account for 90 days) as reserve funds for chargebacks.

    What you can do is contact their card company (Visa for example) and provide evidence that the knowingly made a purchase and shipped it to their address. Visa does its own investigation and even if you have 100% evidence the person is making a fraudulent chargeback, its a 50 - 50 toss up on if they are going to refund you and will convince you that chargebacks from them is simply the cost of doing business.

    Evidence you can provide is their IP, which you can track down to their ISP which will be nearby the physical address of the purchaser and where you sent the item.

    Shipping confirmation from USPS or UPS. They won't assist you in this matter or support you with any documents providing proof they delivered something to a specific physical address, but you can create your own form and tracking information and submit it.

    You can strong arm and threaten the customer that you will consult with an attorney in their local area and take them to small claims court. Likely not useful if the item sold was less than a couple hundred dollars, but I have done this several times for things sold on eBay where the buyer was later banned for non refundable deposits of vehicles or high end electronics.

    Go through the chargeback process, attach a legal interest rate for money held, sell the debt.

    Sometimes you can't win. I provided tons of evidence to Visa that a customer was a scammer (which I found information of online, very easily) and they were known to buy bulk amounts of things on eBay from sellers... and resell them on eBay doing a chargeback at something like 59 days after the purchase and claim the items were never sent. Visa awarded me a full refund, the customer complained the next day... and Visa took the amount out and awarded it back to the customer simply because he complained twice using the same complaint.
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  • Whenever I make a sale, I always save half for the gub'mit, and 10% for a 'rainy day fund' and 10% for reinvestment.

    30% Is for myself, and I only pay myself quarterly, and only if I want to. (In case there is a 'bigger rainy day than expected'.

    If you're not planning on the unexpected, then you're not planning for the inevitable.
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  • Most merchant processors will have a chargeback fee, it's almost completely unavoidable to deal with as your business grows. But it's nothing to get too hot headed over as it is very common. Of course as previously mentioned, do whatever you can to limit the amount of chargebacks as possible - not just from a monetary standpoint, but your processor could issue you a TMF (Terminated Merchant File). From there you're basically red flagged and it is VERY difficult to get out of.

    Now when you get TMF'd (or cut-off so to speak) is entirely up to your processor. Some of them base it off a percentage of sales e.g. 2-4% while others base it off of number of transactions, generally 120-150 chargebacks. Depends on size of the business, your history, etc.

    Many businesses will have multiple merchant accounts open and active with different banks/processors to not only spread out their risk, but to have multiple processing veins open. That way God forbid, if you do get TMF'd you have other channels still active to continue running your business.

    If this really is an issue, I encourage you to do research or ask to see a list of applicable merchant fees. Some of these links may help:

    Google Checkout

    PayPal

    Intuit
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  • Profile picture of the author ZachRobinson
    Have you guys noticed by your experiences if one credit card processor you used had less chargebacks than the other one? Like PayPal?
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    Zach Robinson

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  • Profile picture of the author oldsteel68
    When I started I was using SecurePay for merchant processing. Tons of chargebacks.. Switched to Authorize.net through Chase Paymentech and I couldnt be happier. One chargeback in 2 years..

    Signatures for all deliveries is NOT a good idea. If the customer isnt home it gets brought to the post office where they have to pick it up. I only do signature on larger than normal orders..

    Best bet:
    Switch to a better processor.
    Work on your customer service and keep customers happy and trusting throughout their buying experience with you.

    While I agree that some customers jump the gun and dispute charges, that is where I call the customer on the phone and try to win their trust, make them happy, offer something, etc... I have, in some cases done a complete refund and let them keep the product just on the hopes of them telling a friend or co-worker about us, or at least not saying anything bad.
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  • Profile picture of the author JessicaLee
    This feed is very interesting. I was just in another feed about chargebacks and they didn't acknowledge customer service as a cause for chargebacks at all! They only focused on the fraud side of things - which you guys haven't touched on yet.

    I applaud you for dealing with your customer service issues. But I also hope you are attentive to potential fraud risks. You should always be on the lookout for criminal activity. Visa offers a list of 12 potential indicators of fraud. Can I share links here? I'm new to this forum. If I can, I'll post it. Otherwise, go Google it! You need to be aware of those indicators and be vary cautious if you ever come across such orders.

    Also, there is sometimes a catch 22 with the chargeback fees for a processor. If you pay less in fees, the processor might be quick with the trigger finger when it comes to a TMF. A more expensive processor might be more lenient. For example, your chargebacks exceeded 1% this month, but you won't get in trouble if you can get them under control next month.
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  • Profile picture of the author vishwa
    I am not selling any Physical Products. Though I have selling some ebooks and templates. I have take all the records of the downloads. So, Whenever Someone Open a Dispute in PayPal it was automatically closed within few days, Because PayPal does not offer a refund for Downloadable or Digital Products. But When You are selling a Physical Products always put the tracking code of the delivery for your own records and also integrate it with you Shopping Cart.
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