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 Disputes
or inquires arising from card transactions result in retrievals
and possible merchant chargebacks. A chargeback
means that the amount of the original charge that was deposited
into your business checking account is taken back out. Some
common chargeback reasons are: fraud, dispute over the quality
of merchandise, the cardholder never received the merchandise,
or the amount charged to the card was incorrect. Chargebacks
can destroy a business. They can be a time-consuming and potentially
costly process for small businesses. Therefore, it is very
important for you to take a number of actions in order to
prevent or at least minimize chargebacks.
Make sure that your processor uses a name that your
customers will recognize on their statement. Most chargebacks
start when a customer does not recognize a charge on their
statement event though it may be a legitimate charge.
Provide your merchant account provider with an 800 number
to include on your billing statement. Supplying a toll free
number will prevent a chargeback from occurring much of the
time, as you the merchant will have a chance to rectify the
situation or to issue a refund to the client before they attempt
a chargeback dispute.
Respond promptly to Retrieval request. Both customers and
issuing banks may request copies of sales and credit drafts.
Once a request is initiated a 30-day clock begins. Responding
quickly to get your copy of the draft back is very important.
Keep all sales drafts readily available for 180 days then
store for long term storage in a safe and secure place.
Follow transaction requirements
The first step is to make sure you fully comply with the
transaction requirements issued annually by the major credit
cards. Typically, these require you to:
- Get an authorization
- Have proof the card was present by swiping the card
or by imprinting it on the transaction receipt
- Get a signature from the cardholder and compare the
signature to the back of the card
- If the transaction is a phone order, indicate that it
was a phone order as proof of the customer's call
In addition, follow these helpful hints to further reduce
chargebacks:
- Get an imprint whenever a card is manually keyed into
a terminal. And be sure that all of the transaction information
shows up on the imprinted copy ? including the amount,
merchant name and location, and the cardholder's signature.
- Verify that the number on the screen matches the embossed
number on the credit card.
- Compare the cardholder's signature on the sales draft
with the signature on the back of the card. Check additional
identification if necessary. If the card is unsigned,
request an additional piece of photo ID that has a signature,
and have the cardholder sign the card. Otherwise, don't
accept the card.
- Obtain an authorization number for the full amount of
the sale.
- Do not break the sale into several smaller amounts.
- Check the expiration date on the card.
If you have a MOTO or online business that accepts credit-card
transactions over the Internet, you need to take a few different
precautions:
- Make sure you get an address match when you ran a card
through an Address Verification System terminal or software.
If the address does not match, be sure to call the cardholder
back to verify that it is their card.
- Make sure that the prominent name posted on a website
or on mail-order and advertising literature be the same
business name that appears on the consumer's billing statement.
- Provide your merchant account provider with an 800
number to include on your billing statement. This increases
the chances that a dissatisfied customer will call you
to rectify the situation before they attempt a chargeback.
- Verify large transactions (more than $100) by sending
a fax-back or mail-back form to your customers that requires
them to fill in their name and contact information, credit
card number and card expiration date, and most importantly,
their signature.
- For online businesses, collect the IP address of the
fraudulent order. An IP address is a unique number assigned
to each computer location on the Internet. Once you have
collected the IP address, you can find the owner or the
ISP the owner uses.
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