The Chargeback Battle: Proactive Strategies for Preventing and Winning Disputes

When a customer files a dispute with their credit card company, the merchant pays the price in many ways. Fighting a chargeback is time-consuming and expensive, and too many of them can even jeopardize your merchant account status. Instead of waiting until a chargeback is in full swing, your best bet is to do all you can to set yourself up for success through preventive measures.

Make security a priority

One of the primary causes of chargebacks is security breaches. Perhaps your strongest ally in protecting data safety is your payment services provider. They can furnish you with fraud detection software and other tools that enhance the integrity of every payment transaction you process.

They can also make sure that your point of sale and security software are equipped to meet the evolving set of data safety challenges that confront all businesses today. You can bolster their efforts by ensuring that your systems are always well-maintained and updated to the most recent security patches.

Another step you can take is to invest in payment gateway software and card readers that can accept today’s most secure payment methods. Tap to Pay on iPhone and other contactless near-field communication (NFC) transactions encrypt all sensitive card data, rendering it useless to criminals. 

Furthermore, require that customers authenticate their identity via a PIN or a signature as an extra layer of security. This reduces the likelihood of someone paying with a stolen identity.

Implement clear refund and return policies

Precisely communicating your return and refunds policies helps to prevent potential chargebacks from happening. Make it easier for them to get their money back from you than from their credit card company by ensuring that your policies are as clear and easy to put into practice as possible.

Of course, no merchant wants to process a return, which amounts to a lost sale. However, devoting attention to your policies and procedures in this regard results in a smoother and friendlier way to resolve a potentially difficult situation.

Update your online inventory

Nothing is more frustrating to a customer than paying for a product that appears to be available only to subsequently learn that it is not. This frequently results in a chargeback. In most cases, you can prevent this from happening by ensuring that your online inventory counts are up-to-date.

Clear product descriptions

Vague product descriptions or images can lead to confusion about the merchandise that someone orders and may become the basis for a chargeback. Consequently, every image and block of text on your website should precisely detail the product to which it refers. This careful attention on your part will minimize the chances of nasty surprises when an item is delivered to your customer.

Clear shipping expectations

Chargebacks can happen if someone begins to suspect that their order is not going to arrive as expected. Total transparency on your end will reduce the chances of a communication breakdown. To that end, furnish important details, including shipping carrier, tracking numbers, expected delivery time frame, and instructions on whom to contact with questions or concerns. Should your shipper inform you of a delay, make it a priority to keep your customer in the loop.

Be available

When your customer service team is knowledgeable and readily available via a number of channels, they can frequently resolve a concern before it morphs into a full-fledged chargeback. Even if someone does end up wanting a refund, your team will have initiated it as opposed to it occurring through the client’s bank. That results in a more positive relationship and less frustration and anxiety for everyone involved.

Clear billing descriptors

Someone reviewing the charges on their credit card bill may stop short if they see one from a business whose name they don’t recognize. For many companies, their legal name is not the same as the one that appears on their store’s signage. The client’s natural impulse is to dispute the charge, failing to connect that mystery name with that of a store where they may have shopped weeks ago.

Therefore, one of your most effective payment risk management strategies to cut down on this type of chargeback is to improve your billing descriptor. Be sure that it clearly references the company name your customers know. If discretion is an issue, be clear with customers at the time of purchase about the name they will see on their credit card statement.

Make documentation a priority

Despite your best efforts, chargebacks cannot be totally eliminated. For those that do happen, it is vital that you address them promptly. Keeping complete and accurate records will enable you to provide strong evidence to support your side of the story. This increases your chances of successfully fighting the chargeback claim.

Chargebacks are never pleasant for merchants. However, you can minimize their sting. Use heightened security, clear policies, updated inventory counts, and accurate shipping expectations. Excellent customer service and accurate billing descriptors also help to foster clear communications and a positive rapport.