How to Prevent Chargebacks

Credit card chargebacks are a common and unavoidable occurrence for any business that accepts credit cards, especially if you have a high-risk merchant account. When you think about the prevalence of fraud in today’s digital world, it is understandable how your customer service can still be excellent but not enough to keep customers from taking their money back through this dispute process.

Research Insights

Research shows that most merchants believe they will have some degree of chargeback disputes as they consider it just “part of doing business” with customers. This means we need a way to protect ourselves against these types of losses if we want our businesses to survive while satisfying all parties involved!

Using the Tools Available

Fraud is an ever-changing and complex task that requires a dynamic, evolving approach to reducing risk. For chargebacks to be prevented successfully, there needs to be a variety of strategies in place.

Address Verification Service

Address Verification Service helps reduce risk by automatically checking the billing address listed in the transaction against the address registered with AVS. If they do not match, you could be looking at a fraud situation. Always request shoppers to provide both their billing and shipping addresses when purchasing anything online.

Credit Card Security Codes

Card security codes ensure the shopper has physical possession of their card. Always ask customers for these digits during checkout before proceeding with any payment processing.

Use 3D Secure

3-D Secure Protocol (3DS) provides an additional level of fraud authentication by asking customers to enter a predetermined security code. This protocol was introduced in 1999 and has evolved to meet new technologies.

Stay on Alert

Chargebacks can be prevented before they happen through the use of alerts. By receiving notice when a customer intends to file for chargeback, merchants can issue refunds and stop these disputes.

Network Automated Response

The automated response programs used by card networks can help clear up customer confusion and invalidate provable cases of chargeback fraud.

Order Insight

Visa Order Insight is a plugin for the Visa Resolve Online platform that provides automated, real-time merchant transaction data between cardholders and participating merchants.

Eliminator

Mastercard’s Eliminator connects bank agents with merchant purchase data to resolve inquiries without resorting to chargebacks.

Customer Service is Key

Providing outstanding service is crucial to preventing chargebacks. Merchants need a multi-dimensional approach for communicating with their consumers.

Make Sure Your Contact Information is Available

Customers need easy access to your business’s contact information to resolve issues before resorting to chargebacks.

Communicate Delays

When an item is not available or must be back-ordered, let the customer know as soon as possible. They should have the opportunity for a refund if desired instead of waiting around for delayed arrival.

Follow up on Complaints

If there are any issues, try resolving these problems immediately before going through your return policy or providing customer service contact information.

Monitor Social Media

Respond quickly to customer inquiries on social media, as they can serve as important communication channels.

Take Down Any Fake Reviews

Ask legitimate customers to remove false reviews that could harm your business image.

Be Available

Ensure that your customer service is easily reachable, and respond to inquiries promptly.

Revisit Your Return and Cancellation Policies

Clearly communicate return policies to prevent customer misconceptions that may lead to disputes.

Always Use Delivery Confirmation

Delivery confirmation is essential to prevent chargeback claims about undelivered goods.

Friendly Fraud Does Happen

Understand that friendly fraud occurs when authorized cardholders file chargebacks instead of seeking refunds directly.

Consider Tokenization

Tokenization substitutes sensitive data with temporary tokens, protecting financial information during transactions.

End-To-End Encryption

This security technique blocks third parties from accessing information in transit, ensuring customer data safety.

Be Vigilant When it Comes To Fraud

Continuously monitor for suspicious activity and verify questionable orders, especially with high-frequency transactions.

Implementing these steps can significantly reduce the risk of chargebacks in your business.