Dealing with Chargebacks

Chargebacks.

Sooner or later, all eCommerce storeowners have to deal with them. I know I have.

I’m not saying mistakes don’t happen … but at the end of the day 99% of our stores’ chargebacks are unfounded. And the reasons people resort to them are as varied as snowflakes. Some claim they forgot they ordered, some decide they don’t like the return policy, but most just seem to make up whatever story they feel justifies them going to their credit card company (instead of us) to resolve the dispute.

I’m not bashing my customers, as I said mistakes happen, and there are a lot of people out there who are not trying to be malicious. But malicious or not, chargebacks are a hassle for a busy storeowner. Especially if that storeowner doesn’t know the proper way to handle them.



Do you?

Properly handling chargebacks are part customer service and part lawyer and it’s hard not to get frustrated when you open that big fat envelope from your processor , only to see a name you thought you’d dealt with through the normal return process.

Well, my motto is “don’t get mad, get your money back!” Here is what you should do to totally prepare your chargeback defense.

o Keep all customer and vendor correspondence for at least ninety days. I know people who like to purge old emails at the end of every month. Even though each of my stores has a thirty-day return policy I keep everything relating to a sale for six months. Credit card companies are much more inclined to side with the buyer than the seller- that’s part of their customer service. Even if the customer initiates it after the return policy stated on your site the credit card company will make you prove the sale was legitimate. Keep everything!


o Answer the chargeback with everything you’ve got. Don’t get indignant and send just the sales receipt – that will only mean a second notice with a request for more documentation. Send the sales receipt, order confirmation, shipping receipts including the tracking number, and any and all correspondence with the customer - literally your entire history for the sale. You can send documents from your store, your vendor, your shipper, from where ever and whoever as long as they are related to the sale. Provided you are in the right this will return as a judgment in your favor on the first try.

Now here are a couple things you shouldn’t do:

o Don’t call the customer. Even if you were dealing with the problem personally before, they have elevated it. Calling to try to get them to close the dispute rarely works because they either did it on purpose because they’re not happy with how you’re dealing with them or they don’t realize it is a bad thing for you. Either way it’s usually easier to turn in your evidence and let the credit card company make the judgment in your favor.


o Don’t miss the deadline to turn in your rebuttal. You have a finite amount of time to get your case together (about 7-10 days) and presented. Don’t drag your feet. Wait until the last minute and I guarantee you’ll find you need a copy of something from your shipper that they won’t be able to get to you for a day or so. There is nothing worse than losing money that rightfully belongs to you.

Below are the three most common scenarios associated with ecommerce and ways to deal with them.

1. Merchandise was never received:

Look up the original order and check your records to see if it was indeed shipped. If it has been, input the tracking number into the shipping carriers website to pull up all of the transit/delivery information. Include this with your rebuttal, along with a written statement informing the credit card company that the order was shipped in a timely fashion and supply them with the tracking details.

If the order was not shipped, but is still pending or on backorder (this happens with us because we charge upfront for custom work), check your archive folders for any communication with the customer. Make sure to include all of the emails with your rebuttal, stating that the customer was aware of the delay and willingly opted to wait.

2. Item was returned and credit was not received:

This is by far my least favorite because even if you did refund the money, the credit card company will not check before removing the funds from your account. They assume the customer is correct and you have to prove that the refund was issued before the chargeback went through.

Check to see if the item was received back. If it was, check to see if you refunded the customer. If your company has a restocking fee, make sure to also include this information with your rebuttal. Sometimes the customer thinks the restocking fee is not warranted, and they try to get that money back. So, just send along the proof that you refunded the customer, along with a reason for the semi-credit due to the restocking fee. Sending a copy of your return policy is a good idea as well, just so you have all your bases covered.

3. Couldn’t contact the company to do a return properly:

This is the easiest to handle. I have never lost a fight for this reason. All you need is one email where you give them an RMA and return instructions that include an address. You don’t need to use RMAs but many companies do. If you don’t, then just make sure you send the instructions and an address. If your customer requests this information over the phone - give it to them and then send a follow up email with the same instructions. That way you have some written proof that you communicated with them.

If the merchandise was returned but you haven’t refunded the customer yet, don’t. The credit card company will take the money from your account for the customer plus the chargeback fee - you have no recourse. If you then issue a refund you’ll be out double the money.

If you receive a chargeback for any other reason, make sure you supply the credit card company with adequate information, so you're not stuck holding the bill. Always send a copy of the original order, payment receipt, any email correspondence you've had with the customer, and a typed note explaining why you are disagreeing with the chargeback allegations.

Avoid That Chargeback!



Now let’s talk a bit about how to avoid chargebacks so you don’t have to go through all this trouble. There are simple steps you can take on your website and through customer service correspondence to lower your rate of complaints.

First, include a detailed shipping FAQ that preemptively answers common questions like ‘How long before my order ships?’ and ‘What is your return policy?’. The more information you put in front of the customer, the less likely they will try to challenge you. And if they do go ahead and put through a wrongful chargeback you have that informational page on your site , which shows the credit card company that your customer knew your policies.

Second, having a “Contact Us” page that contains links to important informational pages like your return policy and shipping FAQ page (as well as having a contact form) makes it easier for customers to get in touch with you. A customer is much more likely to go for a chargeback if they have a hard time finding your contact info. And again, this is yet another page that you can forward to the credit card company to prove you were available to the customer.

You can also stem the reversals by providing each and every customer with as much information about their order as possible. Email is your friend. Sending a few simple emails or using functions in the backend of your store to keep your customers abreast of their order status saves time and effort in all areas of customer service.

Set your store up so it automatically sends out an email when a customer places an order. This email should include links to your contact page, shipping FAQ, and return policy. If for whatever reason there is a delay in shipping, especially after it has been shipped, contact the customer right away to let them know. The more goodwill you build the more your customer will trust you and go to you first if there is a problem.

Once the order ships…send them the tracking number with instructions on where to go to track it. Depending on your shipper and your store platform, a customer might need to click on a link or go to a website to track the shipment. Don’t leave it to them to figure out, ,make sure you provide clear instructions for every step they need to take.

These simple steps will lower your rate of chargebacks and make any that do come in that much easier to fight.

Chargeback Checklist:

o Save all customer correspondence for at least ninety days.
o Post contact, shipping, and return information clearly on your website.
o Respond to customer issues and shipping delays immediately.
o Send tracking numbers to every one of your customers.
o Don’t get mad…get your money back!