Online Security » Protect Your Business » Protect Your Business from Chargebacks
When Does a Chargeback Occur?
Chargebacks occur from various reasons: double-charging, credit card expiration, processing errors, unauthorized purchases, lack of signature on a draft, failure to fulfill a request for a sales draft and other transaction irregularities, customers' dissatisfaction often due to undelivered merchandise on time, disappointment in quality, bank errors, etc.
If, for instance, a customer complains about a purchased product and asks the credit card company to refund the sale, it is highly probable that this third party will have the merchant pay a chargeback fee.
Many people use chargebacks as a vehicle for defrauding Internet businesses. Online fraud as a result of chargebacks affects the merchants. These situations appear because it is pretty difficult to detect the credibility of every customer, especially if transactions take place with people from foreign countries. Once the products leave the country, there is little that a merchant can do to reclaim the lost goods.
If you offer goods/services online and accept credit cards, make sure you reduce and eliminate chargeback exposure. Save your time and money!
Many of the chargebacks received can be easily avoided if proper procedures and precautions are taken at the point of sale. Unfortunately, if errors do occur when taking transactions, your business is at risk from receiving a chargeback and being debited.
The first stage of a chargeback procedure comes in the form of a ‘retrieval request’. This is a request from a card-issuing bank to see an original, photocopy or fax of a sales draft to prove the validity of the sale.
If one of your customers disputes a VISA or MasterCard sale, you will receive a letter of notification and will be requested to send your processor a copy of the signed draft or other information.
You can successfully contest chargebacks, if your records are complete and you have complied with credit card regulations. On the other hand, the initiation of a chargeback can determine the cardholder's bank to withdraw funds from your bank account.
You will be notified by letter after your account has been debited. In the meantime you might have already spent the money. That is why merchants should always maintain a balance in their accounts.
If you receive a chargeback letter there will be a heading and a description of the type of chargeback you have received. You need to act immediately upon receiving the letter and need to provide all the necessary papers to resolve the dispute. Failure to do so, will automatically result in a chargeback to your business and will be debited from your account.
Each chargeback has time limits and specific rules and regulations within which one has to work with. All these are set by Visa, MasterCard, JCB , American Express.