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Credit Card Chargebacks
A "chargeback" occurs when the merchant's account is debited for funds from a previous sale. This happens when a credit card holding customer is able to successfully "dispute" a transaction they made with the merchant. The transaction showed up on their credit card bill and for whatever reason they decided they did not want to pay for that transaction, so they went online or called the customer service department of their credit card issuing bank and they filed a formal complaint known as a "dispute". That initiates the process. After the dispute has been filed, the issuing bank will contact the merchant and inform them of the dispute and ask for any information the merchant has or is willing to provide in regard to the disputed credit card transaction sale. The signed sales slip, if available, as commonly would be retained by a merchant in the case of a retail sale where the customer was there in person and presented their credit card to the merchant and then signed the receipt. In the case of a mail transaction, the form whereupon the customer wrote their credit card information and signed the form and authorized the charge. Telephone orders can be more difficult to prove, unless, upon delivery, an impression of the customer's card was made and the customer signed that sales slip. Internet sales can be verified as to what computer was used to enter the credit card information, because that computer's IP address is usually recorded. Sometimes the customer's complaint is not that they did not place the order, but that there has been an unresolved problem or dissatisfaction with the goods or services received. After being informed of the dispute, a merchant needs to either verify the sale as legitimate if it is being disputed as not legitimate, or, in the case of dissatisfaction, try to make the customer happy or voluntarily issue a refund. If the merchant is unable to resolve the matter, the credit card issuing bank may reverse the sale and "charge back" the funds to the merchant. This usually results in a Chargeback Service Fee of $25 or more to the merchant, so if a refund is going to result anyway, the merchant is better off to issue it voluntarily and save themselves the fee.
Communication is important. Make it easy for your customers to communicate with you if they have a problem. If you have a toll free telephone number, ask your credit card processor to include that in the information they furnish to cardholders in their monthly account statements. If the customer is going to see a different name for you on their bill, let them know that at time of purchase. Second, when you accept cards, utilize the CVV2 (Card Verification Value) 3 digit code on the card back. Ask for it when you process a card. Third, use the Address Verification Service (AVS) to enter at least the card holder's ZIP code. This will hopefully help you get your money without being charged for chargebacks. .
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