Chargeback Defense

Merchants Beware: A Chargeback Defense Guide to Help You Avoid the Scourge of Ecommerce

As a merchant, you take pride in providing the best service possible to each and every one of your customers. That’s why it can come as such a shock – even an insult – whenever a chargeback request comes in claiming that you failed to deliver on a transaction. While chargebacks are a reality of doing business, especially in card-not-present situations like eCommerce, there are steps you can take to avoid them outright and to fight back when they do pop up. The following represent six of the most effective strategies, and adhering to them will put you at a significant advantage when it comes to handling pesky dispute requests. 

1) Follow the Rules Exactly

Sometimes chargebacks are avoidable, and sometimes they aren’t. But in either case, if you haven’t followed the card companies’ protocols to the exact letter of their laws, you might find yourself liable even if you can otherwise prove you’ve held up your end of the bargain. It’s exceptionally important that you understand and follow all of the security and operations protocols laid out by any of the major card companies you accept, and that you follow them to the word in order to ensure you’re protected. 


2) Ensure Your Products or Services are Properly Represented

The best way to defend against chargebacks is to avoid them altogether, and one of the best ways to do that is to ensure your products or services are described and, in the case of physical items, pictured, as accurately as possible. Ensuring that buyers know exactly what they’re getting upfront eliminates the chances of a buyer feeling like they’ve been duped and filing a dispute in response. 


3) Provide Unparalleled Customer Service

You can’t please everybody, and even if you’ve described your products or services perfectly, you’re still going to end up with an unhappy customer at some point. The key to avoiding chargebacks in those cases is to ensure that you offer those customers an unparalleled level of service and as frictionless a return process as is possible (and reasonable). Doing so will help diffuse situations with unhappy customers before they can lead to harmful chargebacks.  


4) Utilize Risk Scoring

Not all chargebacks are from unhappy customers looking for their money back; many are fraudulent in nature, and one of the best ways to protect yourself from those is risk scoring. Risk scoring uses artificial intelligence to compare each of your transactions to a database of hundreds of thousands of known transactions in order to determine a score indicating the likelihood of fraud. Beyond a certain probability, the transaction will simply be denied at the outset, saving you from the lost revenue and headache of the eventual chargeback when the real cardholder realizes their card was used illegally.


5) Keep Impeccable Records

No matter how diligent you are, as a merchant, you will eventually have to deal with a chargeback. The key to mounting a successful defense is to have as much documentation as possible to show that you held up your end of the transaction and to provide it to the card company in a timely manner. That means the better and more detailed your records are, the greater your chances of successfully beating a dispute – so stay organized!


6) Choose the Right Payment Processor

Payment processors are not all created equal, and some are more committed to keeping you safe from chargebacks than others. It’s important that you partner with a processor that offers a robust chargeback defense program to help you avoid disputes and to handle them successfully when they do arise. BAMS, for instance, offers a complete chargeback defense system including instant dispute alerts, online dispute management, cardholder authentication tools like Verified by Visa, access to the Cardholder Dispute Resolution Network through Verifi, and a partnership with Signifyd, one of the industry’s leading risk scoring companies. 

For more information on BAMS’ full suite of chargeback defense solutions, contact us today. We’d be happy to provide you with more information on our programs or to get started on a five-point price comparison to show you how much you could be saving on your monthly bills as a BAMS merchant.