25 Apr How to Decrease Chargebacks and Coding for Reversing Chargebacks for Your Business
Credit card charges are disputed by customers every day, both for legitimate claims and with the intent of fraud. Unfortunately, businesses are charged between $20 and $50 for every chargeback that occurs, which can quickly add up for business owners. Managing for these chargeback occurrences requires two tasks: using best practices to decrease chargebacks and learning to code for when chargebacks do occur and may need to be reversed.
Fighting fraudulent chargebacks is an exhausting task that is nonetheless important for all business owners to learn about. The most important fight against fraudulent chargebacks is to implement best practices to protect your customers and your business.
Understanding Common Chargebacks
The best way to fight against fraud is to understand why chargebacks are occurring. This can help you create policies to protect your business. The most common chargeback reasons are:
- Identity theft
- The customer never receives the order
- The customer believes the product or services was substandard
- The customers charge was incorrect or unrecognizable on the credit card statement
Use Technical and Human Fraud Screening
Many Point of Sale (POS) systems come with fraud screening features which can help you fight against illegitimate card use and identity theft. If your POS system doesn’t include fraud screening, consider purchasing a fraud screen plug in. Fraud screening works by reviewing every transaction for a series of red flags, and will suspend the transaction if too many flags are triggered. Flags that your system will watch for include:
- Incorrect security codes
- Billing and shipping addresses that don’t match
- Incorrect cardholder names
- Expired cards
Your employees should also be trained to detect fraud. Make sure your employees check every card for authenticity prior to running it, use an EMV chip reader, check to ensure the card isn’t damaged are worn out, and check signatures on the cards.
Communicate Chargeback Policies
Muddied and unclear policies on refunds and fulfillment make you a target for chargeback fraud and unhappy customers. To fix this issue, create a clear and concise policy that is posted in an obvious place on your website. Make sure to include:
- That your company employs security controls and tools to protect your customers. This will demonstrate to fraudsters that you’re not an easy target.
- Include fulfillment information, either in the final receipt or in a follow-up email. This will help customers understand when they can expect to see their purchase.
- Communicate if the item purchased is in stock or is on backorder, which will help adjust customer expectations.
- Encourage customers to keep a copy of the transaction on file.
- Create a method for customers to easily get in contact with you (via email, form, or phone) if they have a question or issue. This will ensure that customers can get in touch if they have a problem with their purchase or fulfillment.
- If you key in a transaction because a card isn’t working, it is most likely fraud. Either ask for another form of payment (cash) or key it in, but get an imprint of the card. If you don’t have an imprint of the card you won’t be able to fight the chargeback.
Make Sure Your Payment Description is Clear
Your payment description will show on your customers’ credit card bills. When a customer is unclear on what the charge to their credit card was, they can quickly review the description and associate the charge with your store.
Find Your Chargeback Code and Documentation
Despite your efforts to put clear policies in place, purchase the best security, and train your employees, sometimes a chargeback will slip through. When this happens it’s important to know how to code to reverse fraudulent chargebacks.
There are nine categories of chargebacks. Each chargeback code caries its own conditions and requirements, which will help you understand what information needs to be provided to reverse the chargeback. The chargeback groups are as follows:
- Non receipt of Information
- Authorization Issues
- Cancellations and Returns
- Cardholder Disputes
- Processing Errors
- Violation of Operation Regulations
- Chargeback Programs
Once you have discerned the correct chargeback code and collected all applicable documentation, reach out to your credit card processor to submit your information. Chargeback reversals may take time but are worth the effort!To learn about applicable scenarios for each of the chargeback codes, and what documentation to include to reverse them, click here.
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