Customer chargebacks are a huge pain point for any merchant, here’s my experience and the tools I used to fight them.
Back in the early 90s, a customer dispute would be solved by an actual customer service representative of the company. The customer would call up the company and explain that they’d like a refund because of some problem with the product/service. The representative would listen, apologize and respond by wishing to resolve the issue as quickly and smoothly as possible. That’s how customer disputes used to happen, but nowadays it’s quite different.
Nowadays almost anyone can initiate a chargeback and dispute a payment at the click of a button. It is convenient but often abused.
Fighting Online Fraud
The Problem
Recently, I had a fraudster attempt a chargeback on a “goods and services” transaction completed with PayPal. 3 months after the work was completed this customer decided the terms were unfavorable and changed their mind. The fact was that their business was failing and they were attempting to recoup past losses at my expense.
If you’ve built a business online you’ll have faced this problem, someone buys something from you and then disputes the payment and wins a chargeback. This is essentially them asking their credit card company to reverse the purchase and get their money back. All funds are now tied up with the credit card company or PayPal, both of which can take up to 180 days to resolve.
The Solution
If you are good at record keeping and taking client notes the solution will be no problem. If you are not keeping records and client notes, you need to start, NOW!
My solution revolved around saved emails between myself and the client, proof that the work requested was indeed accomplished (as well as proof of good faith work), and lastly, I provided proof that their business was in shambles and that they were attempting to fraudulently recoup funds. Good record-keeping made all of this possible.
Why you should worry about chargebacks
Chargebacks are a real threat to business. You can lose your money and your goods. But, there are some steps you can take to minimize the chances of chargebacks happening.
Chargebacks are like missed sales opportunities because they represent money that could have been made from a sale that didn’t happen. Chargebacks can also be costly to process and can result in fees and other penalties.
On the internet, there is no sure way to confirm the identity of someone making a purchase. You can’t see what they look like or meet them in person. And because of this, there is a much higher likelihood of chargebacks occurring than with offline purchases.
We’ve selected a roundup of chargeback statistics and advice that should help small business owners navigate these murky waters.
The best thing you can do to protect yourself from chargebacks is to fight them! This doesn’t mean that you need to start taking down your online store. Instead, it means using some special strategies for defending your business from chargeback fraud. Doing so can create a competitive advantage over other businesses that don’t know how to fight back against chargebacks.
Website developer, field recordist, instrument builder. My background is largely based in design for the music industry; websites, micro-sites, and apparel. With that experience, I bring a fresh approach to corporate and construction-related web projects looking to stand apart from the competition. My goal is to help clients better understand different aspects of SEO and website development; I write short, easy-to-digest articles on search engine optimization and website performance-related topics.
In my free time, I enjoy field recording, sound design, and building unusual musical instruments.
Michael Winchester is a website developer and search engine consultant in Southern California.
Michael Winchester Design | (562)283-5688