Chargebacks: When They Happen and How to Prevent Them

The word ‘chargeback’ is one of the most dreaded ones by merchants. Depending on the scale of your business, this is something you may have to deal with on a daily basis. If you notice that the number of chargebacks continues to grow, it is time to be proactive and take appropriate measures to save your business. In this article, you can learn about the most common reasons they happen and what you can do.

What are the reasons for chargebacks?

A credit card chargeback takes place when a client files a request to their bank to return costs for the purchase they made. Also, this is something that can occur when a bank finds a problem with a transaction between you and a certain store. Besides the actual chargeback, a merchant also has to pay fees, which is why it’s essential to use a service for chargeback protection. With its help, you will get a message the moment a cardholder notifies the bank about their decision, before a chargeback even occurs.

Preventing chargebacks should begin with something that you can control, such as making sure your site offers enough information to your customers. You should analyze all sections of your site to see if your products have clear descriptions. When it comes to the most common reasons why customers request chargebacks, they are:

  • An error occurred when processing an order
  • An order has not arrived at its destination
  • A service or product has been different from its description
  • Fraudulent activity performed by a customer
  • Problems with authorization
  • The return policy hasn’t been clear, and customer support cannot be reached
  • A cardholder hasn’t recognized the transaction

Minimize chargebacks with these steps

Some of the steps you have to take to prevent chargebacks include the following:

  • One of the first things to do to prevent chargebacks is to make sure that a customer is properly verified. The card they use has to be valid, so you should always use updated verification systems and stick to the most modern security standards. Once installed, a security system won’t allow customers with suspicious cards to make purchases.
  • A lot of customers don’t like dealing with returns, which is why they resort to chargebacks. Your return policy should be fully described on the site, and it should be simple. You should mention when and under which conditions a certain product can be exchanged or returned so that customers don’t have any questions.
  • Make sure that all shipping terms are clearly defined on your platform. A lot of customers don’t realize how long the delivery process will take, so they request a chargeback. You should mention time frames for all delivery companies and your contact information so that customers can learn about the status of their order. It is a good idea to work with delivery companies that provide tracking numbers to their clients. In this way, they are less likely to worry about their order before it arrives.
  • Another reason why customers may be unsatisfied is when product descriptions are far from reality. They should always be accurate and straight to the point if you don’t want to deal with constant chargebacks. You should provide the necessary number of photos to show products in as much detail as possible.
  • For a lot of stores, customer support ends with a contact form on the site. Most clients know that they likely won’t get a response in this way. Having a proper customer support team should improve your situation with chargebacks, as people will be able to make complaints directly. As a result, their first stop for any issue will be your customer support instead of a bank.
  • If people have specific complaints about products, the only solution is to fix these issues. You may need to change a provider of goods or do this yourself if you are a manufacturer. Otherwise, you will have to continue dealing with regular chargebacks.

These are the most basic steps that anyone can take to minimize the risk of unnecessary expenses.

Protect your business from chargebacks

Chargebacks are among the most frustrating parts of owning an online store. While some clients may be genuinely unsatisfied with services or products, others use this tool to their advantage. Learning about new developments that can notify you about chargebacks and providing your clients with enough information are essential.

How do you approach chargebacks? Do you have any recommendations you can share with us? Tell us what you think in the comments below! 

About Carson Derrow

My name is Carson Derrow I'm an entrepreneur, professional blogger, and marketer from Arkansas. I've been writing for startups and small businesses since 2012. I share the latest business news, tools, resources, and marketing tips to help startups and small businesses to grow their business.