HOW TO AVOID CHARGEBACK A Chargeback is the end result when a merchant's credit card customer successfully disputes a transaction that appears on their credit card bill. Customer disputes typically arise from dissatisfaction with the quality of merchandise or services received, merchandise or services not received, or a questionable transaction. A dispute creates a Retrieval, the process of gathering transaction proof.  When a cardholder disputes a charge, the merchant's account is debited for funds in question while the transaction is investigated.  An unfavorable outcome for the merchant results in a chargeback. Needless to say, this is a time-consuming and potentially costly process for small businesses.  Fortunately, you can take a number of actions to prevent or at least minimize chargebacks.  The first step is to make sure you fully comply with the transaction requirements issued annually by the major credit cards. STEPS TO AVOID CHARGEBACK FACE-TO-FACE A)---Always swipe the card whenever possible; i.e., do not give up after one try.  If the card still does not read after 3 or 4 attempts, then try cleaning the track or wrapping it inside a plastic bag and then try swiping it through the card reader again.  If it still does not read, then ask your customer if he or she has a different card.  Only key in the card as a last resort.  This will keep your processing costs down as well as lower your chances of fraud incidence. B)---If the card is present and you are unable to swipe it through a terminal, or if there is no electronic printer, then obtain a manual imprint with signature, authorization code and other important transaction information, such as date, product and amount. C)---Verify that the number on your terminal screen matches the number on the card. And better yet, ask your processor to enable the "4-digit fraud detection" function in your terminal if it is not enabled already.  Sophisticated credit-card thieves switch the fronts and backs of credit cards, so comparing what the magnetic strip reads against the numbers on the front of the card will significantly reduce your chances of accepting a 'doctored' card. D)---If the transaction is for a large ticket item (over $100), or if you suspect fraud, insist on obtaining a photo I.D. from the customer. Compare the name and signature on the photo I.D. with the name and signature on the credit card--don't forget to verify that the customer in front of you is the same person as in the photograph.  If the card is unsigned, then always ask for a second piece of identification and also, insist that the customer signs the card before accepting the transaction. E)---Always check the expiration date on the card. STEPS TO AVOID CHARGEBACK NON-FACE-TO-FACE A)---Having a toll free number is of supreme importance if you are accepting non-face-to-face credit card transactions.  It is not necessary to post this number on your website or to use it for normal contact reasons unless you wish to do so, but it is critical that it be furnished to your credit card processor so that it may be posted on your clients' billing statements.  By having a toll free number included next to your company name on the billing statement, the client will be inclined to contact you the merchant first, rather than the card issuer, if there is some sort of dipute regarding the charge.  Supplying a toll free number will prevent a chargeback from occuring much of the time, as you the merchant will have a chance to rectify the situation or to issue a refund to the client before they attempt a chargeback dispute. B)---If you the merchant are involved in large-ticket (over $100) non-face-to-face transactions, it is very important for you to develop in-house forms to fax to your clients to protect yourself against fraud and chargeback.  These forms should include: 1) Client name, address, phone and other contact information; 2) Card number, name and expiration date; 3) Signature line--most important is the signature line. By obtaining a faxed-back signature, a merchant can reduce potential chargeback risk substantially.  A merchant should always insist on a signature that is either faxed or mailed back when involved in high-ticket non-face-to-face transactions, in particular if he or she owns a smaller business or is involved in high-risk products and/or services--annual billing, travel & dating services, for example. Obtaining a faxed or mailed-in signature is recommended by both VISA and MasterCard and every large processor. C)---Ship your products or deliver your service as quickly and efficiently as possible.  The faster your client receives what has been charged for, the less likely it is that the client will ask for a return or initiate a chargeback.  If your item is out of stock or if you are behind and can not fulfill a service right away, contact the client and inform them there will be an unavoidable delay in fulfilling the order. D)---It is critical that the prominent name posted on a website or on mail-order and advertising literature be the  same business name that appears on the consumer's billing statement.  Chargeback procedures can result when the consumer does not recognize the legal name of Smith Corporation, for example, rather than the name that appeared on the website or in the mail order literature, as Discount Computer Mart, for example. This is an ongoing problem in our industry, in large part because field agents are often not trained well enough to set up the paper trail correctly in the first place. E)---A fairly new development in fraud detection is something called a "CVV2" number, which can be found located on the back side of a credit card in the signature rectangle.  Inputing this three-digit number along with the address and zip code effectivelybecomes almost as secure as obtaining a magnetic-stripe read at retail.  Visa and MasterCard will likely make inputing CVV2 information mandatory in the near future in order for a merchant to obtain the best card not present rate.  Fraud detection improvements such as this may tend to inconvenience both the merchant and the consumer somewhat, but the benefits of added security far outweigh the extra hassle.  We highly recommend use of all fraud detection prompts possible when processing any type of credit card transaction  Failing to input CVV2 information and other requested form fields or terminal prompts can cause a merchant to lose a chargeback dispute. F)---Keep customers informed of the status of their order. G)---If a customer requestes that recurring billing be terminated, close their recurring billing account immediately; do not put off doing so until later in the day to avoid forgetting to close the account. H)---Be certain your refund is easy to understand and easy to locate on your website.  Avoid a lot of legal jargon; Visa and MasterCard require that your refund policy be clearly displayed and it is easy for someone with a normal high school education to understand.  If you are doing non face-to-face transactions and do not have a website, then make certain a copy of your refund policy is given to your customer by fax or mail or that it is inside the packaging when shipping merchandise. STEPS TO AVOID CHARGEBACK A FINAL THOUGHT Obviously, the best way to avoid chargebacks and returns is to provide a quality product and/or service to your clients in the first place. Put yourself in the place of the customer and ask yourself questions such as, would I be happy with this product or service?  And, would I very easily remember and recognize where I purchased this product or service by the business name that appears several days or weeks later on my credit card billing statement? [ Real-Time ] [ Hardware ] [ Software ] [ Rates/Fees ] [ NationCart ] [ EFT Check ] [ Apply ] [ Library ] [ Hosting ] [ Clients ] [ Tricks ] [ Charity ] [ Company ] [ Site Map ] [ eMail ] Site Designed & Developed by Richard N. Johnson Miva, Miva Engine, Miva Mia, Miva Empresa, Miva Merchant & the Miva Corp. Blade logo are trademarks of Miva Corporation.