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 Consumer
credit card protection for Internet purchases has become a
pressing concern for online buyers. But while U.S. federal
law limits a consumer's liability for unauthorized charges
to $50 (US), whether the purchase was made face-to-face or
on the Internet, no such protective legislation exists for
merchants. This means that when there is a dispute over a
charge (such as fraudulent use of a credit card by the buyer
or a cardholder's winning of a dispute over whether the charge
was authorized), the online merchant must pay back the amount
of the original charge, plus any penalties, to the cardholder's
bank. This is known as a chargeback.
A chargeback occurs when a transaction is reversed, and the
amount of the transaction, previously credited to the merchant's
account, is then deducted.
Not only does a merchant lose the actual inventory and the
purchase price; there are also fees charged for each and every
chargeback. More importantly, merchants who receive an excessive
number of chargebacks can lose their merchant account.
A cardmember, or the card-issuing bank, has the right to question
or dispute a transaction. In most cases, before a Chargeback
is initiated, the card issuing bank request a copy of the
sales record, via a "Retrieval". Once a Retrieval
is received from the card issuer, your Merchant Account Provider
will respond by sending a copy of the transaction, if available.
1) Error Chargebacks
- Incorrect account number (ex. Most common keying error
on off-line & credit)
- Illegible copy
- Expired card
- Duplicate processing
2) Dispute Chargeback
- Services not rendered
- Canceled recurring
- Defective merchandise
- Credit not processed
3) Post Transaction Chargeback
- Transaction not deposited within time frame allowed
- Non-receipt of copy
4) Fraud Chargeback
- Multiple transaction, same card, same amount, same merchant
(ex. Failed to void)
- Card not present
- No imprint
- No signature
5) Authorization Related Chargeback
Chargebacks and related fees could pose a serious threat
to your business. To prevent or reduce these revenue losses,
you need to take steps to reduce the risk your business takes
with every order.
Take Extra Precautions When Processing Orders
Before completing a transaction, make sure the information
on the sales draft is accurate, complete, and legible. Scrutinizing
your orders and taking a few extra steps if anything during
the sale process looks suspicious will help you minimize credit
card chargebacks.
At the time of the transaction, disclose your refund and return
policy. The policy should be pre-printed on sales receipts,
web site and/or catalog material.
REQUIRED INFORMATION ON EVERY Mail/Phone/E-Commerce invoice/sales
draft:
- The cardholder credit card number and the expiration
date
- The name that appears on the front of the credit card
- The cardholder's billing address and phone number
- Description of merchandise and/or services rendered
Verify cardholders' addresses.
Address Verification Service (AVS) will verify the cardholder's
billing address with the cardholder's credit card company.
If you do not get an EXACT MATCH, do not proceed with the
transaction.
Click here to read move on
How to Prevent Chargebacks
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