A CHARGEBACK occurs when the funds paid into the merchant account are reversed and refunded to the cardholder. The chargeback documentation can tell you why the cardholder is disputing the transaction.
In most cases, Cardholders are given 120 days from the date of the transaction to make a claim. In addition to the reversal, the merchant is typically charged a service fee for the chargeback. Sometimes the bank will issue a chargeback before you receive notice of the claim. Unmerited "disputes" are common and most instances are settled in favor of the cardholder. Chargebacks can cost the merchant additional fees and if they occur too frequently, can jeopardize merchant account.
Here are a few tips on how you can minimize the chances of getting a chargeback:
Check the cardholder’s signature; compare the first letter and spelling of the surname on the receipt with the signature on the card. If a customer’s card is unable to be read, this may be a sign of fraudulent activity or stolen account number. Ask the customer for a different form of payment. Avoid manually keying in the card, as this may put the merchant at risk of a chargeback.
Use a manual imprinter (not pencil, crayon, or any other writing instrument) to capture the impression of the card. Even if the transaction is authorized and the receipt is signed, there is still a chance that fraud may occur.
When the customer's shipping address and the credit card billing address do not match, you have the right to contact the customer to ask him/her to explain the difference.
Make sure the transaction information on the receipt is legible, complete, and accurate. In any chargeback case, you will have to fax/email the receipt to the bank and if the receipt(s) is illegible, you may lose the case just based on that fact. It is also very important to manage the customer’s expectations upfront, document your efforts and work directly with the cardholder to resolve misunderstandings or conflicts. Our goal is to help resolve these disputes in the merchant’s favor. Please note that all remedies to a chargeback must be in compliance with the Card Association rules and regulations.
Have any questions on chargebacks or received a chargeback notification in the mail? Contact our in-house Chargeback Department at 1(866) 477-8088.