Chargebacks: Why am I not protected?

Before addressing this exasperating question, let me first provide more information regarding why chargebacks exist.

Chargebacks are designed to protect the consumer, not the merchant.

They are to uphold the integrity of the payment card industry. With so many breaches occurring, such as the recent Target breach, consumers begin to question the security of the entire industry. Cardholder distrust is costly to any organization accepting payment cards.

The chargeback system gives cardholders a sense of security within the marketplace. If their card is lost, stolen, or compromised they are able to issue a chargeback and be financially restored. To this end, the burden of proof is the merchant’s to support the legitimacy of the charge.

So what can be done to protect your organization from paying the chargeback penalties for legitimate transactions? That is a good question! There is not one thing, or one practice that is guaranteed to make you victorious in these cases 100% of the time. There are, however, some best practices that I would like to share with you that may increase your chances of successfully refuting these disputes.

Best Practice #1: Keep cardholder signatures on file. Those of you who process in a virtual environment may be looking at this and asking yourselves, “How do I obtain a signature for an online transaction?” You may be surprised to know that some organizations, including ministries, require their account holders (even donors!) sign a physical form for their recurring transactions to keep on file for situations such as these.

Best Practice #2: If you are selling products, keep your invoices for goods shipped and require signature upon delivery.

Best Practice #3: Whether you are selling products or providing services, make sure your refund and cancellation policy is clearly stated on your site. Having your account holders electronically initial, or check the box agreeing to these terms is also a good way to protect your organization.

Best Practice #4: Secure a working telephone number, answer it as the name of your organization, and make sure it is listed on your cardholder’s credit card statements. You will want to make sure that your merchant services provider always has your up-to-date information on file to ensure that this information is displaying to your cardholders correctly.

Best Practice #5: When a cardholder calls you requesting a refund or cancellation of a recurring gift, handle their request in a timely manner. This will alleviate the cardholders need to initiate a chargeback with their issuing bank.

Best Practice #6: Make sure the name displaying on your cardholder’s statements is a name that they will easily associate with your company. There are many times cardholders dispute a legitimate charge unknowingly simply because they did not recognize the name that showed on their credit card statement.

Best Practice #7: If you do encounter a chargeback request, respond to the notice promptly. There are numerous chargeback reason codes and each may require different types of supporting documentation. If you have questions regarding what is acceptable, please reach out and connect with your Relationship Manager for assistance.

Implementing these simple practices may make the difference from losing to winning your next chargeback case.