Part Two: Is an Ounce of Chargeback Prevention Worth A Pound of Cure?

Chargeback Prevention

In part one of this two-part series, we looked at some of the technology-based solutions merchants have available to them to catch fraud early on and stop it before it can result in chargebacks and lost revenues. In part two, we’ll look at the other side of the coin – legitimate chargebacks filed by customers who feel like they’ve been wronged. These chargebacks can’t always be avoided, and sometimes all a merchant can hope for is a fast and easy resolution. But there are steps that merchants can take to minimize the number of legitimate chargeback requests they face, and they all revolve around understanding the customer-side of the equation and elevating the quality of service provided. 

Elevating Customer Service as a Means of Chargeback Prevention

Legitimate chargebacks never come from happy customers – it’s the unhappy ones merchants need to focus on to minimize disputes. One of the most effective ways of getting ahead of chargebacks is putting a specific focus on the customer-side of the sales equation to minimize the number of unhappy buyers that turn up in the first place, and then educating support staff on how to handle the situation when one does emerge. 

Be Easily Accessible to Customers

It’s actually incredible how far a little bit of good one-on-one customer service can go in talking a customer down from the chargeback ledge, which makes it frustrating that so many merchants simply don’t do a good enough job at providing support. One of the most powerful steps merchants can take in reducing non-fraudulent chargebacks is being accessible. That means making it easy and convenient for customers to get in touch and meeting them in the mediums where they’re most comfortable. Answering email promptly, responding to social media posts, and minimizing hold times and callback times on the phone are all simple, but highly effective ways to make customers feel heard and helped, significantly reducing the chances they’ll file a dispute. 

Make Returns and Cancellations as Simple as Possible

One simply way to reduce chargebacks is to make it as easy as possible for customers to cancel orders and return products. Unfortunately, sometimes customers place orders and then change their minds afterward. Making it difficult for them to reverse the process is a surefire way to push up chargeback rates. The first step in ensuring that doesn’t happen is to have a clear, easy to understand, and reasonable return policy. Next, there is no reason for returns to be complex. Customers should be able to handle returns remotely without the requirement to deal with a customer support specialist unless they want to. Amazon is a perfect example; every order comes with a return label packed right in, or provides an easily printable one on the web that customers can simply slap on the original packaging and drop in the mail. That isn’t realistic for most merchants, but it’s an example of a top player taking frictionless returns seriously. Finally, the cancellation process should be fast and easy. If an order hasn’t been prepared for shipping or gone out the door, there is absolutely no reason to make it difficult for buyers to put a stop on their order. 

Make Sure People Know What They’re Buying

This is a big one, especially on the web where people make purchases without ever having a chance to handle the item they’re buying, and, in many cases, with only a stock photo to represent the product. Getting a description wrong or offering information that’s misleading in any way whatsoever represents a potential disaster. A customer opening a package only to be unpleasantly surprised is a high chargeback risk because not only will they be disappointed, they might also feel intentionally misled. If that’s the case, they’re going to show absolutely no mercy and won’t hesitate to go right to the card company to ensure they get their money back quickly. At that point, customer service and a good return policy are the only hope. But the way to prevent the situation from occurring in the first place is to be as accurate and transparent as possible in product descriptions. That’s especially important for merchants selling unique or custom items that can’t be well represented by stock product photography or descriptions. 

Make Shipping Transparent

Once a product is in the mail, it’s largely beyond a seller’s control. But what isn’t beyond a seller’s control is keeping the customer informed on every stage of the shipping process. Customers that are well educated on the shipping process, who receive regular updates on the status of their order, and who are given special notice any time there is a delay or problem are patient customers. Customers left in the dark, on the other hand, are impatient. That can be the difference between a confident customer accepting a delay in shipping or delivery, and a customer assuming they’ve been ripped off when they can’t get a straight answer on where their package is and filing a dispute. As a result, merchants should ensure that their shipping policies are clearly defined, access to tracking information is provided and easy to use, and that any delay whatsoever results in a notification to the buyer. 

How Partnering with BAMS Can Help Minimize Chargebacks

BAMS understands how damaging chargebacks can be to merchants, especially when they build up and result in action from the credit card companies. For that reason, we provide every one of our merchants with a suite of chargeback prevention and defense tools designed specifically to make it easier to get ahead of fraud before it happens and to quickly and effectively mount a defense against disputes when chargebacks do come in. Our integration with Signfyd, one of the premier risk scoring services in the industry, ensures that fraudulent transactions can be caught and automatically stopped as soon as they’re submitted. In cases where a fraudulent purchase does slip by Signifyd’s safeguards, they cover the full cost, removing the liability from the merchant. We also partner with Verifi to give our merchants access to the Cardholder Dispute Resolution Network, enabling a direct link between merchants and card issuers in cases of disputes and greatly reducing the friction in mounting an effective defense. Our instant dispute alerts ensure that our system is always watching for new disputes, even when the merchant isn’t. When one comes in, we send notification by SMS and email to ensure merchants will never miss a response deadline due to lack of dispute awareness.

For more information on these tools, as well as others like 3D Secure and our online dispute management system, check our five step pricing guide and speak to a member of our team or to take advantage of our unique five-point price comparison.