ForumsMerchant Services

Chargebacks are a big and growing problem.

A merchant is billed for chargebacks as they occur. . Because a
merchant may be charged back in error, and because chargebacks may
often involve complicated customer disputes, a chargeback may be
appealed by the merchant. Thieves occasionally abuse the chargeback system. For example,
an unscrupulous customer will make a purchase over the Internet with
his own credit card and then issue a chargeback once the product or
service is received. In such cases merchants can have difficulty
recovering payment.

Chargeback processing (handling) is complex as a result of frequent
rule changes by the major credit card companies. There is an emerging
market for business software that
simplifies thechargeback process as well as separate chargeback
processing services
.
You said that you have established a new policy to refer all chargebacks to collections. How is that working.
Has the collection agencies been successful.
Best of luck, LUCKIEST

Thanks for your answers. My question is to deal with those unscrupulous customers who claim nonreceipt, and those who claim defective but refuse to do an exchange. Yes - those happen. We ask them to send the product back, and they don't. They just file a chargeback. Think I have the right to send the account to collections?

My company has been opened 3 yrs but I have been in other businesses for the last 9 yrs. My buyers are one-time buyers mostly so I'm not sure how I can word a letter. I have mostly consultants and legal accountants helping me out, and they said that they don't see anything right or wrong sending one time customers to collections... If anything, the customers become more willing to deal with problems when they have a collections agent calling them.

I've sent collections companies after customers who do not pay their import taxes (those taxes get billed back to me by Fedex). For some reason, customers never answer my phone calls and such, but when a collector calls, they start providing proof of payment or even payment. So I do collect at least 30-50% of the amount back, after paying collections fees.

I want to see if there are legal implications to send collections to people who CLAIM that they dont receive their goods when fedex clearly shows a signature. I'm not really worried about whether they will come back or not - If I get a customer who is beyond reason and is unwilling to deal with my customer service, I don't want them back. Case in point - my last chargeback was with a customer who received goods, claims partial defect, but unwilling to do an exchange. Instead I get a chargeback. I have all emails stating they dont want to send it back...

Luckiest - Thanks for your input. I get 3-4k of bad debts a year. I don't like forgiving - I rather assign to collections and forget. What do you think?

You mentioned (in another post) that you do $2 million a year in sales. Even if ALL of your $4K in bad debt is credit card chargebacks, that's only one-fifth of one percent of your sales. I have over a dozen retail clients who'd consider that world class performance! In my experience, you'd normally have more "no-fault" transactions than that (where neither you nor the customer did anything wrong -- i.e., the apartment groundskeeper signed for it and kept it, the manufacturer mispacked it, the customer moved, etc.).

I know you'd like the number to be zero, and that's very admirable management and cost control on your part. Still, if you have a retail operation and only one-fifth of one percent of the general public is trying to steal from you, a lot of people would say count your blessings!

I deal with chargeback by first calling the customer personally to ask if everything was fine with the order. I tell that I am calling as a regular followup to our customers.

If everything is fine, I send the chargeback to the CC company with all the appropiate paperwork, such as order, delivery statement and any correspondence and also my notes of my phone call with date and time noted.

If things are not fine, I fix the problem and then send all of the above information to the CC company.

I have found that I get all of my chargebacks resolved this way.

Two things re your questions about chargebacks you would do well to understand:.

#1, unfortunately, when you deal in non face-to-face environment, you are particularly vulnerable to credit card chargebacks. Unless you have BOTH original siguature on a credit card voucher AND proof of card in hand (which you'll have neither) you chances of prevailing in a chargeback dispute are slim and none. Just chalk it up to experience and cost of doing business. Thankfully most customers are reasonable and honest; the few who aren't and abuse the system just come with the territory.There ARE things you can do as a merchant to avoid being ripped off. Your merchant provider should have trained you in these areas. If not, you need a new merchant provider.

#2, I suggest to all our MOTO (mail order/telephone order) merchants to always have some sort of return policy and dispute resolution verbage included in the 'sales contract' that the customer views at some point in the transaction. I suggest having a qualified attorney help you out with this, no do-it-yourself jobs. This way, if you do get stuck with a chargeback, at least you'll have access with good chance of prevailing in small claims court if necessary, if the loss is large enough to go to the trouble.

Visa USA has a good website with lots of useful info on chargebacks, including tips on how to avoid them. I suggest ALL credit card accepting merchants have a look...find the section on "Chargebacks" in the table of contents.

• http://usa.visa.com/download/merchants/rules_for_visa_merchants.pdf*

Barry G
www.merchantservices-help.com