Ways for Retailers to Prevent Chargebacks

By Monica Eaton-Cardone

Introduction

An experienced businesswoman who sold her first business when she was 19 years old, Monica Eaton-Cardone has appeared on CBS and ABC as an expert in her field. Most recently, Monica Eaton-Cardone co-founded Chargebacks911, a dispute mitigation firm dedicated to helping merchants and businesses prevent and combat chargebacks.

Chargebacks, which occur when a retailer must refund a customer due to a fraudulent transaction claim, can carry serious and long-lasting consequences, from fees to business shutdowns.

Chargebacks

Fraudulent chargebacks are estimated to cost the industry more than $10 billion a year, especially through online retailers. However, there are several simple ways for businesses to help prevent chargebacks.

For instance, if the customer’s card is declined, do not simply re-run the card. Not only can this cause multiple charges, it may be a sign that the card itself is not authentic. Instead, ask the customer for another card or form of payment. Also, do not ship a replacement item without communicating with the customer.

Conclusion

Especially for online-only retailers, sending an unrequested substitution can result in a chargeback if the item is not exactly what the customer ordered. Furthermore, do not charge the customer before shipping the item. The longer customers have to wait to receive their orders, the more likely they are to report the charge as fraudulent.