As a merchant doing business online, your concern among other things is how to avoid chargebacks with your eCommerce (online) account. What are chargebacks and how can they be avoided?
Chargeback in credit card/banking parlance is equivalent to a reversal of the billing you’ve made on a customer’s/client’s credit or debit card for goods or services sold and delivered. In short, you as a merchant are required to “refund” the amount the client/customer claims should not be charged to his account for whatever valid reasons.
The chargebacks can be classified into two major classifications: Customer-claimed and Fraudulent Transactions.
Customers can claim among other things that the goods or services were not delivered as promised or were found wanting as to quality or workmanship, or that there was a double-billing for a certain transaction, or that the amount was incorrectly billed, meaning overbilled; or that a promised refund was never made. Fraudulent transactions, like billings through credit card identity theft or unauthorized use of credit cards can also be contested.
First, about the things within the control of the merchant and therefore avoidable chargebacks. Make sure you make the right delivery as ordered in terms of price, quality, quantity, timely delivery. These details should be correctly inputted in your billing. Otherwise, the customer/clients’ complaint becomes a valid issue and you as a merchant are obliged to “refund” or be held liable for the chargeback. Bear in mind, that aside from losing the sale and customer goodwill, you might be liable for penalties from your Credit Card provider/ and/or bank. Keep a file of your transaction receipts like invoices duly signed by the client, so that should a dispute arise you have a ready proof and reference to support your counterclaim.
While under the Consumer Protection Act and e-Commerce Laws in some countries customer’s rights in online transactions are more or less adequately protected against unscrupulous merchants, there is a need to balance it with protecting merchants’ rights against consumers and customers going overboard in making unsupported claims for chargebacks.
With the available technologies for detecting fraud, it would in the best interest of the merchant to secure his website against fraud by investing a bit in fraud-detection machines.
As much as possible, as a merchant do the following as precautionary measures to counter unauthorized, and therefore fraudulent use of credit cards due identity theft. Remember, you as merchant are as equally responsible as the Cardholder in preventing the unauthorized use of the Credit or Debit Card. Make clear instructions to your sales clerks and other personnel handling the credit card transaction to make sure all relevant and pertinent data are filled up in the form, to make sure the credit cards are valid and not expired.
Be wary of overseas addresses as it poses increased risk by making it difficult for you to verify and validate; be more alert and wary when some clients demand more-than-usual fast delivery and would offer to pay “extras” for the purpose; if possible, check by phone and email for confirmation if you find an order unusually big or more than frequent purchases are being made.
While most if not all of your employees can be trusted watch out for one or two who might do you a disservice by employing their fraudulent acts of credit card data theft. If found out, their fraudulent acts can get you unnecessarily involved in the criminal act as you are by command responsibility, their superior.
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