The more you know, the better. Knowledge really is power. This is why we’re happy to provide important information to you via the Verifi blog as your business knowledge resource. Our goal is to provide you with the knowledge-based tools you need to be empowered and ready to do your best for your business. In this week’s post, we’d like to dig deeper into credit card chargebacks. There are so many misconceptions about this critical aspect of doing business that it is imperative that everyone involved has the real facts and details about chargebacks.
Many merchants don’t have a strong enough grasp on what a chargeback is or what it involves. This is not surprising considering the amount of misinformation to be found online. Count on us as your trusted resource for all things chargebacks, payment solutions, fraud prevention, and payment technology.
Chargebacks happen when a customer contacts their credit card company and asks for a reversal of a charge on their credit card. Credit card chargebacks were initially introduced as method of consumer protection. This was due to concern over the ease of credit card theft and fraud.
Now, in 2017, chargebacks have become more than simply a way to protect consumers from fraud and theft. In fact, the tables have turned and many people have learned how to use the chargeback process to their advantage and to commit fraud and theft against merchants.
As we see an increase in online and card-not-present (CNP) transactions, we’re also seeing a correlating increase in credit card chargeback fraud and theft. The numbers aren’t going to drop anytime soon––but you can learn how to prevent and limit these chargebacks to protect your business and livelihood.
To understand why you need to be ready to fight credit card chargebacks, along with the information you need to do this effectively, it helps to understand the chargeback process.
1. The customer contacts their credit card company and asks for a charge to be reversed.
2. The credit card company reviews the request. If the request is considered valid, the money is refunded, or the credit card company may decline the request if it finds insufficient evidence regarding a problem with the charge.
3. When a refund is given to the customer, the issuing bank will start the credit card chargeback process. This first step in this process involves contacting your acquiring bank to get the required funds.
4. At this point, you should be notified by your bank that a chargeback has been filed. The investigation into the chargeback really begins now.
5. You likely will be asked to provide detailed documentation and evidence to help fight the chargeback. This documentation includes: proof of purchase, proof of receipt of the item, proof of customer authorisation of the purchase, your refund and return policy, any details from conversations, emails, chats with your customer service team, confirmation emails that confirm the sale, and approval of the charge to the credit card. As you can understand, this information can be challenging to collect, but it is very important when proving that the chargeback is in fact chargeback fraud.
6. If you win the case, the customer will be charged again for the purchase. If you lose, you’ll be expected to cover the cost of the chargeback and pay for any fees issued to you by your bank and the customer’s bank.
This process can take anywhere from six weeks to six months. You should also note that, in some instances, a customer is allowed up to two years after a credit card purchase to file a chargeback.
When you’re not equipped to dispute chargebacks, this process can be very costly, time-consuming, and stressful. However, the more you know about the credit card chargebacks process and how you can successfully prevent and dispute these charges, the less of a drain this process will place on your business.
Learning More About Credit Card Chargebacks
There is much more that we want you to know about chargebacks. To help you continue learning about credit card chargebacks, please have a look at the following resources (be sure to bookmark these important items):