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mitigate chargebacks



Best practices to mitigate chargebacks

In the first of this two-part series, we gave an overview of chargebacks and discussed typical situations that lead to their occurrence. Chargebacks originated as a means to protect consumers. In general, the merchant is considered “guilty” until he presents evidence that he is innocent of the claim. The best defense against chargebacks is offense. Following are best practices you can implement to help avoid chargebacks in your business.

  • Conduct an AVS check and only process orders with a valid AVS response.
  • Obtain evidence of receipt of goods (i.e. signed shipping receipt).
  • For ecommerce, consider using “Verified By Visa®” or MasterCard’s “SecureCode.” This proves card ownership and enhances your position on chargeback representment.
  • Require customers to provide card identification numbers like CVV2 (Visa), CVC2 (MC), and CID (AX).
  • Process refunds as quickly as possible, and notify customers in writing when a refund has been issued or a membership cancelled. Provide the date the transaction was submitted and a reference number.
  • Provide a clear billing descriptor and a phone number (this appears on the customer’s credit card statement), so the customer can contact you directly rather than calling their bank to discuss any dispute.
  • Provide a contact phone number and an email address on every page of your website so consumers can contact you directly.
  • State the terms and conditions of the sale or service clearly and in plain view. All correspondences should include this information in the message or via a link to a web page.
  • Use email to notify consumers of the details of sales and to indicate that their cards will be charged.
  • Obtain written or electronic signatures from cardholders giving you permission to charge their cards on a regular basis for monthly fees or recurring payments.
  • If you offer memberships or subscriptions, make it easy for members or subscribers to cancel with a “no-questions asked” policy.
  • Authorizations must always be done for every deposit, and deposits must not exceed the amount you have authorized.
  • Authorizations must be “positive.”
  • Avoid using voice authorizations.
  • If you are settling a transaction with an authorization more than seven days old, you must reauthorize the transaction. While the authorization might still be valid, you will likely receive a better interchange rate.

Chargebacks can be costly, time consuming, and threaten the validity of your merchant account. Using the above best practices to mitigate chargebacks can help protect your bottom line as well as your reputation. Contact us to learn more.

Visa and MasterCard are registered or unregistered marks belonging to one or more unaffiliated third parties that do not endorse or sponsor Vantiv Integrated Payments, LLC.

 

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