Many merchants think of chargebacks as an unavoidable cost of doing business. However, chargeback prevention is an essential task to help maintain revenue, and protect yourself against future chargeback disputes. Below are some effective chargeback prevention strategies and tools that you can implement immediately to help your return on investment.
1. Maintain Your Product
Make sure your product descriptions and pictures are clear and descriptive with as much information as possible–include color, sizing, material, quantity, etc. If there are no surprises with a customer’s order, chargebacks are less likely. Also, maintain the quality of your product. Low quality items are often subject to chargebacks for being “not as described” or “defective merchandise.”
2. Use Pre-Sale Tools
One of the easiest ways to limit threats is to utilize some of the pre-sale tools available to merchants. AVS (Address Verification Service) helps to determine if the card is being used fraudulently. If there is a high likelihood of fraud, you can cancel the order and avoid a chargeback. Similarly, asking for a card security code can also ensure that the cardholder is in possession of the card at checkout. If the card security code does not match, this could indicate fraud and should be cancelled to prevent a chargeback. Using 3D Secure (Verified by Visa and Mastercard Securecode) serves as an additional line of defense to ensure that the cardholder is, in fact, making the purchase.
3. Use Best Possible Billing Descriptors
If your billing name is different than your business name, you have a few options. You can either make this clearly known to your customers, or ask your processor to replace your legal name with something customers will recognize. If your name is too long and surpasses the allowable character count, try abbreviating to avoid confusion. Customers may forget about their order. Having clear and recognizable billing descriptors will help jog customers’ memories, and prevent chargebacks from happening.
4. Be Present – Conduct Manual Reviews
Having electronic tools in place is important for chargeback prevention, but it’s also important to manually examine your orders. Keep an eye on orders that are unusually small or unusually large. Criminals will often “test” the card with small purchases that they hope will go unnoticed in order to determine the validity of the card. Criminals will also buy items in bulk or make multiple large purchases in a short amount of time if the first one goes undetected. Be alert and check on any order that you may find suspicious, as it will often result in a chargeback. Also, keeping a blacklist on hand, or keeping track of customers who have previously filed a chargeback can also help to limit chargebacks in the long run.
5. Use Lots Of Shipment And Delivery Options
Chargeback prevention is not just about the ordering process. To help reduce chargebacks, you also need to make sure customers receive orders completely and in a timely manner. Make sure your delivery estimates are accurate–know your company and what your employees can realistically accomplish. If you’re not able to fulfill orders on time, chargebacks are more likely. Monitor inventory to ensure you have the items customers are ordering. Make sure to package items properly to ensure their safety. If you’re unable to fulfill their order, or customers receive items that are broken, you’re asking for chargebacks.
6. Check Your Policies
Make sure your cancellation and return policies are clearly visible on every part of the website. Also, having your customers check a box ensuring they have read the policies will also help to prevent chargebacks. Make sure the policies are easy to read and understand. Be as flexible as possible with returns. If you have strict or unattainable policies, you’re more likely to receive a chargeback.
7. Provide Extraordinary Customer Service
With the rise of social media and increased mobile purchasing, consumers expect prompt responses to questions or concerns. If customers cannot get in contact with you, they’re more likely to file a chargeback. To help with your chargeback prevention, consider a live chat on your website. With live chat, you can potentially resolve issues in real time, before they become a dispute. Make sure to answer emails promptly. Monitor social media–consumers use social media through the day and consider it a major form of communication. Be prepared to handle customer questions on social media the same as you would in an email. Make sure contact information in all forms is clearly visible on the website. If customers know how to reach you and can do so easily, it diminishes the potential for chargebacks.
Chargebacks can pose a serious threat to merchants. While these are some general tips to help with your chargeback prevention, it’s important to have as many strategies and tactics as possible at your disposal. Here are more great tools to add to your chargeback prevention toolbox and help protect your bottom line.